Question: Are the following two observations inconsistent? a . Rising demand for housing causes prices of new homes to soar. b . Many families refuse to
Are the following two observations inconsistent?
a Rising demand for housing causes prices of new homes to soar.
b Many families refuse to buy homes as prices become prohibitive for them.
The observations are
a
consistent because both of them apply to movements along the demand curve.
b
inconsistent because due to rising demand prices will become too high and no one will be buying homes.
c
consistent because rising demand will shift the demand curve and higher prices will cause movement along the demand curve.
d inconsistent because in the first one the demand increases and in the second one the demand decreases due to higher prices,
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