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    Supply & Demand Effects on Home Price

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    In this activity you will need to go to the realtor.com website. Follow the instructions for "Finding a Home", and check housing prices for a 3-bedroom, 2-bath house in several cities, for example, San Francisco, CA; Topeka, KS; Dallas, TX; Concord MA; and Seattle, WA. Explain why housing prices vary from city to city. Clearly explain how supply and demand affect the prices of the homes and be sure to show your work.

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    Solution Preview

    In Dallas there is lot of variation in prices. Homes are starting from $179000 to $499000 and may be upwards also. In Seattle the homes are starting from $500000.

    This variation in price is due to demand and supply forces. Supply and demand curves shows how the quantity demanded or supplied changes in response to a change in the price of that good. Demand curves slope downward, supply slope upward. The determinants of market demand include number of potential buyers and their respective taste, income, other goods and expectations, if any of this change, the demand curve shift. Movements along a demand curve are induced by change in the price of that good. At the point where the two curves minded equals the quantity supplied will be established.

    At higher price, seller supplies more than buyers are willing to ...

    Solution Summary

    542 words to explain how house prices vary from city to city and how supply and demand dictate them.