Assuming that consumers purchase two goods: housing services h and other goods it. Housing services is plotted on the horizontal axis and other goods is plotted on the vertical axis. Generally. where will a consumer choose to locate on a graph, given their budget constraint so [I = {p x h) + x]. and the indi'erence curves represent different amounts of utility? (1) Consumers will choose to locate where the utility curve is equal to the supply curve. {2) Consumers will choose to locate where the budget constraint is tangent to the highest possible indifference curve. (3) Consumers will choose to locate where the demand curve crosses the indifference curve. {4) Consumers will choose to locate where the quantity of housing services equals other goods. Why would I oanne1 a consumer. continue to live in the same house even if her indi'erence curve changes? {1) Because of the adjustment costs. a consumer may be better off staying in the same house even though her preferences for housing have changed. {2) If she chooses to move. utility will be at a lower level than it would be if she did not move. {3) Options (1) and {2) are both incorrect. {4) Options (1) and {2) are both correct. In general. housing demand is inelastic with respect to both price and income. This means: {1) that the absolute values of both elasticities are higher than one, so Em, > -1 and El.\" > 1. {2) that the absolute values of both elasticities are lower than one. so EH5. > -1 and E,\"