Consider the market for new suburban houses. Characterize the following as (positive/negative) (demand/supply) shock. How will equilibrium prices and quantities be affected?

A. An increase in the price of concrete

B. An increase in the cost of loans

C. An drop in government spending on highways connecting suburbs to cities

A. An increase in the price of concrete

Negative supply shock

The equilibrium price would rise and the quantity at equilibrium level would fall.

B. An increase in the cost of loans

Negative demand shock

The equilibrium price would reduce and the quantity at equilibrium level would fall.

C.A drop in government spending on highways connecting suburbs to cities

Negative supply shock and negative demand shock

The equilibrium price would fall and the quantity at equilibrium level would fall.