Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 1

In a study session,one of your fellow students says,"I think our econ text book has a mistake: It shows the supply curve for housing as a vertical line,which implies that a rise in price causes no change in quantity supplied. But everyone knows that if home prices rise,construction firms will build more homes and supply them to the market. So the supply curve should be drawn with an upward slope: higher price,greater quantity supplied." Explain briefly the mistake this student is making.