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. c and d

Answer 1

Answer:

The correct answer is option d.

Explanation:

If the government provides subsidies to home construction company it will reduce their cost of producing homes. So at the earlier cost, they will be able to provide more homes. This will cause the supply of homes to increase. This will cause a rightward shift in the supply curve.

At each price, the number of homes supplied by the companies will increase.