This Comes from an Actual Newspaper Story

question 18

Essay

This comes from an actual newspaper story.The average price of a home in W County rose more than 12% last year but the number of sales fell nearly 15%.Its the old law of supply and demand, said a spokesman for the Board of Realtors.The number of sales is down because there's a higher demand for properties but there isn't a corresponding number to sell.
a.What does the old law of supply and demand predict would happen to price and quantity if the demand curve shifts outward and the supply curve does not change?
b.Draw a diagram to illustrate the case of a shift in demand and/or supply curves that is consistent with the observed change in prices and quantities.

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Definitions:

White Water Rafting

An outdoor adventure sport that involves navigating rivers with varying degrees of rough water using an inflatable raft.

Cheesecake

A sweet dessert consisting of one or more layers, the main, and thickest layer contains a mixture of soft, fresh cheese, eggs, and sugar.

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity demanded, leading to a stable market condition.

Consumer Surplus

The variation between the total value consumers can and will offer for a good or service and the amount they actually expend.