Suppose That the Equilibrium Price and Quantity of New Houses

question 116

Multiple Choice

Suppose that the equilibrium price and quantity of new houses both increase.Which of the following could be a cause of this change?

• A) The wage paid carpenters who build new houses might have risen.
• B) A technological advance in framing a new house might have occurred.
• C) The rent for nearby apartments might have fallen.
• D) More home buyers might have moved into the area.
• E) The cost of wood framing used to build houses might have fallen.

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Definitions:

External Decision Makers

Individuals or organizations outside of a company (e.g., investors, creditors, regulators) who use the company’s financial information to make decisions about engaging with the company.

Common Stock

Represents ownership shares in a corporation, giving shareholders the right to vote on corporate matters and to receive dividends.

Additional Paid-in Capital

The amount of money that shareholders have invested in a company in excess of the nominal or par value of the shares.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, indicative of the company’s net worth.