In some countries, real estate agents negotiating with prodpective clients who want to sell their houses all recommend initial asking prices that are as high as the current market permits. They do this because potential sellers are more likely to entrust their houses to the agent who values them highest. In a housing market with falling demand, the predictable result is a sharper drop in the number of houses sold than the drop in demand alone woyld account for.
Q) Which of the following, if true, best explains the result described as predictable above?
a) A drop in demand for houses depresses prices disproportionately if earlier strong demand stimulated much new construction.
b) Real estate agents do not earn the commission on houses they help sell umtil the slae is actually executed.
c) Many people sell their old house below the asking price in order to obtain the funds to buy a new one
d) In a housing market with rising demand, even houses that were originally overpriced usually sell at the asking price.
e) For many sellers of houses, the initial asking price comes to represent the true value, below which they will not sell.