Using a demand and supply diagram, comment on the likely impact on the market for new houses of relaxing planning regulations? (6)

  1.  The relaxing of planning regulations would mean that it would be easier to develop and build new houses due fewer constraints on developers. (1st mark application)

  2. This would therefore mean that the supply of houses would increase as the regulations decrease, causing a shift to the right in the supply curve. (2nd mark application)

  3. The Supply/ Demand equilibrium would therefore also shift to the right, causing a new market equilibrium. (3rd mark application)

  4. This would therefore cause an increase in quantity of housing while reducing the price of housing. (4th mark analysis)

  5. However, the effect of the price decrease would depend on the current elasticity of demand in the housing market. (5th mark evaluation

  6. This is all under the assumption that other factors in the housing market remain constant. (6th mark evaluation)

FM
Answered by Fergus M. Economics tutor

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