In an economy with a perfectly elastic supply of housing, what is the primary outcome when demand rises?

In an economy characterized by a perfectly elastic supply of housing, the supply of housing units is highly responsive to changes in demand. When the demand for housing rises, suppliers can immediately increase the quantity of housing available without any increase in price.

The situation implies that builders and developers are willing to supply as much housing as is needed at the existing price level. Consequently, when demand increases, the market accommodates this demand by expanding the quantity of available housing rather than adjusting prices. Therefore, while more units may be built to meet the new demand, the prices remain unchanged due to the elasticity of the supply.

The outcome reinforces the principle that in a perfectly elastic supply scenario, the prices do not fluctuate in response to increased demand, as suppliers can freely provide additional units to meet consumer needs without constraints.