Answer to Question #243535 in Microeconomics for Geraldine

Question

 Discuss the Theory of Supply and its implications to the housing market.

Answer 1

Theory of Supply states that an increase in price results in an increase in quantity supplied.

When the demand for housing is high, but supply is low, home prices often rise. When there is a glut of housing available in a market, homeowners may lower their prices due to less demand in the market.