If a Town Begins Requiring Builders to Build on One-Acre

question 11

Multiple Choice

If a town begins requiring builders to build on one-acre lots,instead of smaller quarter-acre lots,the supply curve for new homes will

• A) shift to the left.
• B) shift to the right.
• C) reach market equilibrium.
• D) reflect equilibrium pricing.

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Definitions:

Contract Rate

It is the interest rate stated in a contract, such as a loan or lease agreement.

Non-interest-bearing Notes

Debt instruments that do not accrue interest over time, thus repaid at their face value.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow over a similar term the funds necessary to purchase or lease an asset.