Suppose That Consumers Begin to Believe That the Price of Housing

question 134

Multiple Choice

Suppose that consumers begin to believe that the price of housing will be lower next period. What will happen in the market for housing as a result of these expectations?

• A) Nothing will happen now. Consumers will wait for the price to actually decrease before changing their behavior.
• B) Demand for housing will increase now as people adjust to the expectation.
• C) Demand for housing will begin to fall now as people postpone their purchase until prices are lower.
• D) Investors will buy up all the housing inventory believing they are getting a "deal."

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Definitions:

Specific Performance

A legal remedy whereby a court orders a party to perform a specific act, often pertaining to fulfilling a contract.

Personal Services

Services provided directly to individuals based on personal skill or expertise.

Unique Goods

Items that are distinct or unusual in some way, often making them irreplaceable or hard to replicate.

Specific Performance

A legal remedy in contracts where a court requires a party to perform their specific duties under the contract, rather than pay damages for not fulfilling the contract.