Housing Market in the United Kingdom - Essay Example

The person makes $250 a week clean from his hot dog stand operation. The person gave up a job where he was making $400 net a week. This means that the individual is incurring an opportunity costs loss of $150. Opportunity costs can be defined as what a person is given up to perform a particular action (Varian, 2003). The opportunity costs of working on Sunday to gain a little overtime is the leisure family time the person could have enjoyed in his day off.

Part (b)
The law of demand states, all factors being equal, that if the price of a good or service increases the overall consumer demand for that good or service will decrease (Investopedia, 2009). A consumer product that is very popular in households is Kellogg’s Frosted Flakes. If several generic brands of corn flakes left the marketplace the supply curve for Kellogg’s would shift to the right. Another way the demand curve would shift is through positive marketing news. If this product won an award for the best cereal in 2008 the demand for the product would shift to the right. A different product we could analyze is GM cars. The supply curve of GM cars would shift to the left if several manufacturing plants close down. Another way it would shift to the left is if the prices of Japanese imports decrease.

Question 2
Part (a)
The demand for the housing market in the United Kingdom could shift to the left or the right if there are changes in factors that influence the marketplace. There are several factors that could change the UK ownership housing market demand. If the population in the UK changed this variable would affect the demand. An increase in the population would raise the demand. Another factor that could affect the buying of homes in the UK is if the price of rental homes changes. A decrease in the price of the rental would make the option of buying a home less attractive and would decrease the demand. A third factor that could affect the demand for homes in the United Kingdom is a change in the income of the population. Higher-income among the population would increase the demand. A fourth factor that could affect the demand in the housing market is homes appreciation.
Part (b)

The supply of homes in the United Kingdom can be affected by different factors. One factor that can affect the supply of homes in the UK is the occurrence of natural disasters. A natural disaster such as an earthquake can destroy thousands of homes which would instantly diminish the supply of homes. A second factor is the UK’s unemployment rate. If the unemployment rate increases more homeowners would make the decision to sell since they could no longer afford to own their homes. This would increase the supply of homes in the UK. A third variable is construction activity. If construction increases the supply of homes in the UK will rise. A fourth factor that could affect the supply of homes is migration. The massive migration of British people into other regions would increase the supply of homes. Read More