Question

A key factor that determines the geographic extent of a housing market is the distance that commuters are willing to travel from home to work. Which of the following events would NOT help to expand the geographic extent of the housing market in a metropolitan area?
Price of gasoline declines
State gasoline tax increases
Public transit fares decrease
None of these

Answer 1

Answer:

State gasoline tax increases

Explanation:

As commute distance to place of work is an important factor in the housing market, an increase in steel gasoline tax will make people pay more to commute. Since they are sensitive to the cost incurred when commuting, they will try as much as possible to reduce the distance they travel to work.

This results in contraction of geographic extent of the housing market in metropolitan areas.