The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 1

Here is a good question to get you thinking about supply and demand as a process of coordination. Millions of Americans change their residences each year, many moving long distances to new and strange areas. How do they all find places to live?
(a) Who sees to it that every individual or family moving to a new state finds someone in that state willing to sell or rent them a house or apartment that suits their tastes and circumstances?
(b) Who oversees construction planning so that those states that are growing most rapidly manage to expand their stock of housing at a rate that matches their population growth?
(c) List some of the institutions that lower transaction costs for Americans who must sell a house and buy another house in order to move from one city to another.
(d) During the years when the communist government of China claimed ownership of all housing in the nation, it also maintained housingexchange stations in all the major cities. Why would transaction costs be much higher with a housing exchange than with a system of private ownership and changing prices when it comes to facilitating trades among millions of people who want to move?