Article Review Supply Analysis
1. At first, the rise in the GST will have relatively little impact upon the decisions of new home buyers to purchase homes. This economic factor is due to the fact that, the building and the construction industry cannot respond to changes in supply costs very quickly, because of the nature of the business and the nature demand in the construction sector. For instance the homes currently up for sale, regardless of the cost of the items used to construct these homes, will be affected more by last year's prices of building supplies rather than current price structures. Thus, even though demand usually goes down as price goes up, the prices of homes will not immediately rise because the costs of supply last year are what is affecting the prices, by and large. Thus, although conventional supply analys
If this is the case, hopefully demand will remain relatively consistent for the industry. Also, a reduction in overall levels of building activity, because of a previous reduction in demand in years past, may further reduce supplies (although generating the reduced level of supply costs) to an extent that any sharp rises in demand that unexpectedly occur will produce a corresponding ability in the industry to raise prices. If the actual construction cost prices fall, the new tax upon construction supplies will likely be offset. ) demand might very likely go down. They will continue to demand construction, because there is no need for suppliers to greatly increase the cost of the structures, because of the drop in actual costs of materials. If individuals feel they have no other choice, because of their economic situation, their job prospects, and current modes of life, to live in a certain area, then they have less flexibility in terms of refusing to purchase a home, although the type of structures they buy may be affected by cost. Thus, it is easier for construction companies to pass on their costs to the consumer, because demand is less elastic in this particular industry, than in some other industries. There will be no or at least additional costs to pass onto consumers. However, optimistically, there seems a possibility that there will be other factors that offset the potentially negative effects of this increase. However, if all other factors remained unchanged, next year, as the price of the supplies involved in the construction industry began to increase, because of the rise in taxation, the prices of the homes and buildings that made use of these materials will also have to increase, to offset the increased costs of supply. However, it is noted by the government that, if there is a rise in cost because of the tax upon supplies, most of the cost of the tax will be passed onto the consumers through a rise in price of dwelling spaces. Thus, although the ratio of tax to cost of supplies will have shifted, the overall cost of construction supplies should hopefully remain relatively the same. Individuals will continue to seek to purchase homes.
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