Economics (Demand and supply)

Charles

2007-11-09 5:18 am

In November 2002, the Secretary for Housing, Planning and Lands, Mr Michael Suen, announced a package of none measures to stabilise the property market. Two of these measures were the 'indefinite cessation of sale of Home Ownership Scheme flats' and 'halting of land auctions'.

(a) Suppose the supply of private housing is fixed. With the aid of a supply-demand diagram, explain how the 'halting of land auctions' affects the price of private housing.

回答 (1)

用戶22404

2007-11-09 9:44 pm

✔ 最佳答案

(a) A vertical supply curve is drawn. Halting of land auctions will keep the supply fixed. If demand does not change, the price will be stabilized as supply is also fixed.
(b) A positively-sloped supply curve is drawn. Indefinite cessation of sale of Home Ownership Scheme flats will decrease supply immediately, hence shifting the supply curve to the left, pushing up the prices if demand curve does not move.
(c) The price will fall as demand curve shift to the left i.e. decrease in demand.

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