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Residential Housing Market during Recession

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Show the effect on the U.S. construction residential housing market in the event of severe economic recession. Draw diagram to illustrate the answer

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During a severe economic recession, consumers would focus on the basic necessities as food and clothing and not only residential houses. The effect on the ...

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The solution illustrates graphically the behavior of the residential housing during a recession.

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Supply and Demand Graphs.

For each of the following, draw a separate diagram for each of the following markets. Demonstrate what happens to the Supply and Demand graphs with your answer. Describe what happens to equilibrium price and quantity.
(Hint: Remember the difference in a change in demand [or supply] and a change in quantity demanded [or supplied]. Also, not every event requires a shifting of both curves - unless appropriate).
A. U.S. new construction residential housing market.
Event: A severe economic recession such as the country recently experienced reduces incomes nationwide.
B. U.S. air travel market.
Event: American Airlines unexpectedly folds (ceases operations) overnight.
C. The U.S. domestic car market.
Event: The price of foreign cars increases due to an exchange rate shock.
D. The market for large SUVs.
Event: A change in the price of gasoline in the U.S. rises by 33 cents each week for 6 consecutive weeks, then stabilizes at the new high price.

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