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Supply and Demand Paper

Essay by   •  March 20, 2012  •  Essay  •  721 Words (3 Pages)  •  1,764 Views

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Purchasing a new home is like the American dream. When me and my wife decided to buy a house, it was probably the most biggest decision that we both ever had to agree up on. Buying a home must be thought out carefully and it must be taken into consideration. We were first-time home buyers that were pretty much taking a risk. While purchasing the house as first-time home buyers, I did not understand how other fees are involved other than the asking price. We were just focused on how much the house costs, and what interest rate that we can get on our loan. There are so many things like homeowner's insurance, title insurance, property taxes, closing costs, appraisal fees, private mortgage insurance, and report fees that people who are purchasing a house must think about. I now understand why some people think that they are better off renting a house.

Supply and demand is one of the most important things that affect the costs of a home. In determining supply and demand, there are many factors that can play a part. For instance, the U.S. economy. We will never see gas prices at $2 a gallon again and the economy looks like it is not getting any better, but when the economy is doing well, people can be able to make money and afford more new things like new cars or go away on vacations. Basically what I am saying is that if people start having good jobs, then there would be a demand for owning homes because people have more money. Whenever the demand for houses increase, then the price for houses increase as well, therefore increasing supply. The costs of getting materials to maintain a home is a major factor. This could make the costs of homes increase as well. If the costs of materials increase, then the demands for houses decrease because not everyone can afford to take on the responsibility of a home.

Substitutes are basically products that take the place of a certain product. Renting a home or an apartment is the perfect substitute for a person who do not want to purchase a new home because like I said, "Not everyone can afford to take on the responsibility of a home." When the demands for the homes are high, then the substitutes for renting should be low. When the demands for owning a new house are low, then the substitutes of renting a home should be high. If you actually think about it, there is nothing wrong with renting a home. It is less expensive and less headache.

Complements are a product that is beneficial to another product. When a certain type of good are high in demand, then the demand for complements are high as well. When it is low, the demands for complements are low. A good example is hamburgers and hamburger buns. When the demand of hamburgers is high, then people are going to need its complements and that is hamburger buns. When the demands of hamburgers are low, then its complements are also low because people are going to purchase less hamburger buns. The materials that we need to maintain

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