If the government grants subsidy to homebuilders

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a) Read the statement below carefully, and decide whether it is true or false. And then explain your answer (whether “true “ or “false”).

If a product becomes more popular among buyers, then its supply will decrease and its price will rise as shoppers buy more of it from the sellers. (Describe what happens in the S&D market-graphs for the product, to support your true/false answer.)

b) Read the statement below carefully, and decide whether it is true or false. And then explain your answer (whether “true “ or “false”).

If the government grants a subsidy to homebuilders, then the supply of lumber will increase because lumber is an input in building houses. Describe in words what happens in the S&D graph for lumber, to explain your answer.

Reference no: EM131240560

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