1. Does this article indicate a problem about which we should be concerned in the first place? Shouldn't the market take care of everyone who wants housing?

The market takes care of people who want to purchase at the market price. But if that market price is too high for a significant number of people, then it could be an instance of market failure.

2. What is happening to the level of income inequality in Olathe? Why?

Income inequality will be increasing, because as people spend more and more of their income on available housing, there is little available for additional goods, struggling to make ends meet.

3. Henry Ford was a proponent of what is referred to as efficiency wages, in which individuals are paid a wage above what would be the market equilibrium. Among other things, he wanted to make sure that his employees could actually purchase the cars they were producing. Could the same thing work here? Why or why not?

Depends. This is certainly an analogous situation, since some builders are concerned about their families' ability to purchase the homes that are being built. Whether workers would respond to an increase in wages is debatable, since it could simply result in an across-the-board increase in cost of living.

Multiple Choice/True False Questions