Question 7:

Using the original graph and equilibrium you constructed in Question 6, now model the housing market in our hypothetical city at a more recent date. Specifically, assume that in the years between the time of Question 6 and our analysis of a more recent date here in Question 7, there has been a significant increase in the population of our city. And some moderate amount of new construction has added some new housing to the market. However, the population growth has outstripped the new housing construction and the new price of housingP₁is significantly higher thanP₀. Graphically demonstrate these new curves and the new equilibrium (labeling itP₁andQ₁). Explain.