Suppose That Consumers Begin to Believe That the Price of Housing

question 72

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 yet. Consumers will wait for the price to actually decrease before changing their behavior.
• B) Demand for housing will increase, causing the price of housing to increase rather than fall.
• C) Demand for housing will begin to fall, and the price of housing will decrease.
• D) Demand for housing will begin to rise as investors believe they are getting a "deal."

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Definitions:

Chase Demand

A production strategy where production levels are adjusted to match demand fluctuations, minimizing inventory levels but potentially increasing operational costs.

Subcontracting Cost

Expenses incurred when a company hires external suppliers or service providers to perform certain tasks or functions that are part of the production process.