Question

Housing market in the United States between 2015-2019

• Use the model of supply and demand and provide a textual and diagrammatic explanation, using the supply and demand curves for the changes in the prices of the good
• Explain the elasticity of supply and demand of the good
• Discover and describe the market structure of the good and specifically if there are any cartels/price fixing activities in the industry effecting the price changes discussed

Answer 1

The price and quantity of goods and services demanded in the market place are determined by the consumers' demand and amount supplied by suppliers.Both demand and supply curves intersect to determine the equilibrium price and quantity.If demand increases and supply does not change , then there will be higher equilibrium price and higher quantity. If demand decreases and supply does not change , then it leads to lower equilibrium price and lower quantity.

The price elasticity of demand is the percentage change in quantity demanded of good and services divided by percentage change in price.The price elasticity of supply is the percentage change in the quantity supplied of a commodity divided by the perentage change in the price .

The nature of the market and the degree of competition in the market for goods and services is referred as the market structure.Thus market structure is the number of firms producing the same goods and services in the market and the structure depends on the competition prevailing in the market.Cartel refers to a group of producers who work together to protect their own interest.Cartels can fix prices in order to avoid competition based on prices.Cartel members can raise prices together.