Question

A technical oversupply of property results when:

a. there are more units than consumers
b. consumers are unable to afford current rents
c. there are more consumers than units
d. none of the above

Answer 1

A technical oversupply of property is when there are more units than consumers, resulting in an excess of vacant units indicating a market imbalance.

Explanation:

Technical Oversupply of Property:

A technical oversupply of property occurs when there are more units than consumers (a.), meaning the quantity supplied exceeds the quantity demanded at the current market price. When suppliers produce more properties than there are consumers looking to rent or buy, this can lead to an excess of vacant units, contributing to a drop in rental prices and a potential market correction. In contrast, when there are more consumers than units (c.), this typically results in increased prices due to high demand and insufficient supply, and when consumers are unable to afford current rents (b.), it may indicate an affordability issue rather than an oversupply.

Understanding market equilibrium, where the quantity demanded and quantity supplied meet at a certain price, is crucial in these contexts. In a situation where Q₁ (the quantity supplied) is greater than Q₀ (the quantity demanded), the outcome is an oversupply in the market.