Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

The diagram illustrates the market for new houses. What would bring about the shift in the market equilibrium position from X to Y?

  • Aa fall in income tax and a rise in building costs
  • Ba fall in interest rates and increased efficiency in house-building
  • Ca fall in population and a rise in taxes on building materials
  • Da rise in building subsidies and a fall in incomes

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