Economics - supply and demand, help pretty please!

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lauramercier
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OK, so.. Imagine the market for buying and selling houses and presume that the market is in equilibrium.

What would happen to price and quantity for each of these scenarios (and a quick sentence as to why would be such a great help!):

There is a rise in income:
Price will... rise or fall?
Quantity will... rise or fall?

Surely this will cause prices to rise and would quantity rise also as more people are selling their homes due to their new higher value?


Estate agents increase the fees they charge customers for selling their houses:
Price will... rise or fall?
Quantity will... rise or fall?

Would quantity fall due to people being put off selling due to high estate agent costs? As for price, would price begin to fall due to demand falling? As people who are desperate to sell their homes reduce price to encourage someone to buy it?

Private landlords reduce the price of rented accommodation:
Price will... rise or fall?
Quantity will... rise or fall?
So since it has become more affordable for people to rent, would this cause the price of houses up for sale to reduce due to the fact they are now competing against the cheaper rental market? Would the quantity of homes for sale reduce because people aren't prepared to sell their homes for a reduced price?

The government introduces a policy of building large numbers of new houses?
Price will... rise or fall?
Quantity will... rise or fall?

Would quantity rise due to the fact the government have said there must be an increase in homes? And would this cause price to fall since there are more homes available for people to buy?
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danny111
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This is a bit of a silly topic to choose, there is an entire theory on the housing market (if you are interested google dipasquale wheaton 4 quadrant model).

But ok let's go with it.

Income: just affects demand.
Fee: affects supply
Rent falls: demand for subsidy increases means what?
Gov plan: interesting, in the short term demand might fall - you think in the future more houses out there so prices will fall, so you wait to buy. and obviously in the long run supply goes up.
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lauramercier
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(Original post by danny111)
This is a bit of a silly topic to choose, there is an entire theory on the housing market (if you are interested google dipasquale wheaton 4 quadrant model).

But ok let's go with it.

Income: just affects demand.
Fee: affects supply
Rent falls: demand for subsidy increases means what?
Gov plan: interesting, in the short term demand might fall - you think in the future more houses out there so prices will fall, so you wait to buy. and obviously in the long run supply goes up.
This is what I was given in a question paper so I have to just go with it Thank you for your help
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