According to the neoclassical model of residential investment, an increase in population in Addis Ababa would lead to an increase in demand for housing. This increase in demand would put upward pressure on housing prices. As housing prices increase, it would incentivize developers to increase residential investment in order to capitalize on the high prices.
Therefore, in the case of Addis Ababa experiencing a large increase in population, we can predict that this event would lead to an increase in housing prices as demand outstrips supply. This in turn would lead to an increase in residential investment as developers seek to meet the growing demand for housing in the city.
Overall, the neoclassical model of residential investment suggests that the increase in population in Addis Ababa would lead to higher housing prices and increased residential investment in response to the growing demand for housing.
6. Addis Ababa, the capital of Ethiopia experienced a large increase in population owing to
high birth rate and rural-urban migration in recent times. Use the Neoclassical model of
residential investment to predict the impact of this event on housing prices and residential
investment?�
1 answer