If the Supply Curve for Housing Is Perfectly Inelastic, a Reduction

question 222

Multiple Choice

If the supply curve for housing is perfectly inelastic, a reduction in demand will cause the equilibrium price to:

• A)rise and the equilibrium quantity to fall.
• B)rise and the equilibrium quantity to stay the same.
• C)fall and the equilibrium quantity to fall.
• D)stay the same and the equilibrium quantity to fall.
• E)fall and the equilibrium quantity to stay the same.

Identify the impact of interest rates on the valuation of bonds and perpetual securities.

Analyze the effect of storage costs and interest rates on commodity investments.

Recognize the importance of timing in maximizing the value of an asset.

Understand the effects of inflation on the real interest rate and its impact on consumption decisions.

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