Housing Subsidy Shifts Supply Curve Rightward

Steps:

• Transfer payment acts as a subsidy to housing providers, reducing their costs for low-income units.
• This shifts the supply curve right, increasing quantity supplied at each price.
• Lower equilibrium price results from excess supply.
• At the new lower price, quantity demanded increases, causing movement along the demand curve.

Why D is correct:

• Per supply-shift law, producer subsidies decrease marginal cost, shifting supply right and prompting movement along unchanged demand as price falls.

Why the others are wrong:

• A: Both movements imply only price changes affect curves, ignoring subsidy's supply impact.
• B: Demand shift would raise price, but subsidy targets supply, not buyer income directly.
• C: Demand shift fits income transfers but mislabels this as supply-side policy effect.

Final answer: D