If individual income rises because of a boom, then the demand curve for new houses will ________ and the equilibrium quantity of new houses will ________.

Question

Not shift; not change.

Shift to the right; increase.

Shift to the right; decrease.

Shift to the left; decrease.

Answer 1

If individual income rises because of a boom, the demand curve for new houses will shift to the right (as people are more willing and able to buy new houses), and the equilibrium quantity of new houses will increase (as a result of higher demand).

So, the correct answer is: Shift to the right; increase.