Economic Theory and Housing Market

The core of frugal theory is based on vend and carry. Demand is what consumers are pass oning to buy at unity by one given wrong. Supply is what suppliers are willing to sell at a given footing. We can wherefore relate this to the rig out market. on that point are factors, which can amplification or lessening supply, e.g. cost and availability of resources, government tax and so forth There are also many factors that affect indigence, e.g. price of substitutes (flats), price of acclaims (mortgage), etc. These factors can thence both subjoin of decrease demand. THE HOUSING MARKET I will character the housing market to try and prove if divergent economic theories have elements of truth in it by looking at statistics and facts, or is it simply theoretical and unrealistic. THEORY hotshot ---------- The frontmost economic theory states that if real household income rises then demand for a good, thence houses should increase. Although housing is seen more as a necessity, certain houses can also definitely be seen as luxurious.

YEAR NUMBER OF HOUSES BOUGHT (000S) AVERAGE INCOME 1990 1400 11,184 1991 1300 12,103 1992 1128 12,824 1993 1191 13,405 1994 1279 13,863 1995 1311 15,636 1996 1243 16,519 1997 1440 17,713 1998 1347 19,057 1999 1470 19,641 2000 1499 Looking at the data we can nearly automatically see that the increase in income has as a result increased the demand for purchasing houses due to con sumer confidence and spending. If they have ! more funds then they believe that they are able to spend more and therefore take out a mortgage. THEORY 2 heed are two goods, which are bought in coalition with each other, as they are dependant on one another, e.g. flatulence and car. A not so obvious compliment to buying a house, other than a mortgage is pestle duty. I will look at the amount seal of approval duty...If you compulsion to get a full essay, order it on our website: BestEssayCheap.com

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