The Micro-economics Concepts Assignment 2

Table of Contents


 The Micro-economics Concepts Illustrated Through an Article Through the article. ‘Supply vs. Demand: Why Is Housing Hurting?’ of October 18, 2011, posted on the Wall Street Journal, the author, Mr. Nick Timiraos questions the forces bringing about the supply-demand imbalance and confusion.

The author starts by exclaiming, “is poor supply or low demand the biggest cause for concern in the contemporary housing market?” In answering the question, he points out that a part of the problem is due to the lack of enough buyers for homes in the US. This, he notes, is evident from the extremely low mortgage rates being offered. He also traces the confusion to the non-availability of attractive homes at many parts of the country, that is making the available buyer lack the houses they could want for purchase.

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The Micro-economics Concepts
The concepts of Micro-economics

This view however challenged, by chief Economist Paul Dales, arguing that, since 30 years. back, there has been an excess supply of one million homes, available to be traded. He further cites the poor economic situation, as the cause for the decreased level of home purchases in the past. The author cites another problem, which could be hampering the supply-demand stability of the home market, as the acutely decreasing home prices.

From the different accounts, the debate ends with no clear definition of the problem facing the homes’ market in the U.S (Timiraos1). However, the author integrates the different versions of the explanations, into the causes for the confusion facing the US homes’ market. These include the availability of many homes at the places, where customers are not willing to buy, which is the result of the housing boom. the overpricing of the many homes available for sale – an effect of the declining inventory. and the short sale cases, which make up the bigger part of the market.

The economic concepts illustrated through the information include the concept of demand, where the shifts in the demand curve are depicted through the changing preferences of buyers, where the case is that, despite the availability of about a million homes for sale, the buyers cannot find the homes they want to purchase. In the area of buyer expectations, the buyers are not willing to buy the homes, which are located at the far-flung locales.

The concepts of Micro-economics
The concepts of Micro-economics

The concept of demand is clearly depicted through the case of the inflated. home prices, of the homes that are available for sale, as a result of the declining inventory. This case is thus, leading to decreasing demand, in response to the increased prices. The concept of demand is also indicated through the findings, as the inability of Americans in the area of purchasing homes, according to Economist Paul accounts. According to him, this directly leads to an imbalance and a failure to establish the equilibrium, as the sellers are offering price, but the buyers are unable to offer a bargain price, so that equilibrium can be established.

The concept of market depicted by the housing boom, which was in response to an increase in the demand of homes, which has been affected by the shift in the demand for homes at the undesired locales. The cost of production is another concept reflected through the article, as sellers are overpricing their homes, in an attempt to avoid the sale of the homes, at prices less than the mortgage debt owed, which the banks may offer (Timiraos&nbsp.1).

The Micro-economics Concepts
Concepts of micro-economics

Works Cited

Timiraos, Nick. “Supply vs. Demand: Why Is Housing Hurting?”& 18 Oct. 2011. Web. 26 Mar. 2012.

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