Every year in Houseville, California, builders construct 2,000 new homes—the most the city council will allow them to build. And every year, the demand curve for housing shifts rightward by 2,000 homes as well. Using supply and demand diagrams, illustrate how each of the following new events, ceteris paribus, would affect the price of homes in Houseville during the current year, and state whether home prices would rise or fall.

a. Houseville has just won an award for the most livable city in the United States. The publicity causes the demand curve for housing to shift rightward by 5,000 this year.

b. Houseville’s city council relaxes its restrictions, allowing the housing stock to rise by 3,000 during the year.

c. An earthquake destroys 1,000 homes in Houseville. There is no affect on the demand for housing, and the city council continues to allow only 2,000 new homes to be built during the year.

d. The events in a., b., and c. all happen at the same time.