The Relationship Between Interest Rates as a Percent (X) and Housing

question 101

Essay

The relationship between interest rates as a percent (X) and housing starts (Y) is given by the linear equation Ŷ = 4094 - 269X. For what interest rate will the maximum number of housing starts be achieved?

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Definitions:

Equilibrium Quantity

At the market equilibrium price, the amount of goods or services provided matches the amount that is demanded.

Substitutes

Goods or services that can replace each other in usage, such that an increase in the price of one leads to an increase in demand for the other.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price in a market.

Equilibrium Price

The price point in the market where the amount of products offered meets the amount of products wanted.