Question

Suppose the government decides that every family should own its own home. To bring this about, the government decides to subsidize the home-construction industry by giving the home-construction companies $10,000 for every house that they build. As a result of this,

a. the supply curve of new houses would shift leftward, since it now costs $10,000 more for builders to produce a house.
b. the demand curve for new houses would shift rightward, since now every family would want to buy a house.
c. the demand curve for new houses would shift leftward.
d. the supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price.
e. none of the above
Oil producers expect that oil prices next year will be higher than oil prices this year. As a result, oil producers are most likely to:_____.

Answer 1

d. the supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price.

Place more oil on the market this year, shifting the curve rightward.

Step-by-step explanation:

1. In the given scenario the government is willing to give home-construction companies $10,000 for every house that they build.

This will result in more willingness on the part of the construction companies to build more houses.

More houses built means more income coming in from the government.

Therefore the supply curve of home building will shift to the right.

2. When oil producers expect prices of oil to increase in the next year, there is a need to control oil prices by increasing availability of oil in the market.

Increase in price results from a scarcity of oil. So to mitigate this excess oil is supplied to control price increase.

This action will shift the curve rightward.