Question

When prices for homes rise, why might construction companies decide to build more homes?

Answer 1

Answer:

B. to make a profit

Explanation:

Profit is the major reason why so many people venture into any business and construction companies are no different.

According to the law of supply, when demand increases and the supply is not met, then the price increases. According to the same law, if the demand decreases, then the price also decreases. For a well functioning market, there needs to exist an equilibrium between demand and supply.

The construction companies decide to build more homes when the prices for homes increases to meet the demand and make a profit.