Question:

A) Suppose that you are a developer who specializes in building new homes. What types of factors would

you consider before starting new projects (building several single-family homes) in suburban

Washington, D.C. and Las Vegas, Nevada? Elucidate. (4 points)

B) Assume that the market price of new housing is $100,000 in Las Vegas, and local government officials

modify regulations which increase the cost of building new homes. The higher costs cause supply to drop

by 18%, the price elasticity of demand is 1.5 and the price elasticity of supply is if 3.0.

Based on this information, what is the resulting equilibrium price of new housing in Las Vegas.

{Show your work} (3 points)

C) Would the modified regulations {in 3B)} in Las Vegas impact your decision in 3A)? Explain. (2 points)