Question

What is the application of demand and supply in relation to housing shortage?

Answer 1

Demand and supply in housing shortage involves the relationship between price and quantity of housing. Rent control policies can affect housing shortage.

Step-by-step explanation:

Applications of Demand and Supply in Housing Shortage

Supply and demand play a crucial role in understanding and addressing the issue of housing shortage. When there is a shortage of housing, the demand for housing exceeds the available supply, which leads to a rise in prices. This in turn affects the quantity of housing demanded by consumers. For instance, as the price of housing rises, the quantity demanded decreases.

One specific example of how demand and supply impact housing shortage is rent control policies. Rent control sets a maximum price for renting a property, which may lower the price of housing but also reduces the quantity supplied by landlords. This can result in a shortage of rental housing because the quantity demanded exceeds the quantity supplied.

Summary:

Demand and supply in relation to housing shortage involve the relationship between the price and quantity of housing. As the price of housing rises, the quantity demanded falls. Rent control policies can affect the quantity of housing supplied and result in a shortage of rental housing.

Answer 2

House prices will increase

Step-by-step explanation:

A shortage in the market supply occurs when sellers are unable to match the demand for a product. It is a situation where many buyers are chasing a few goods or services supplied in the market.

The price at which supply and demand match is the equilibrium price. Both sellers and buyers are happy at the equilibrium price. The housing sector is known for responding to the forces of supply and demand. In case of a shortage, the prices of houses will go up. As the many buyers compete for the few houses, suppliers will hike prices to make profits.