A Chat on supply and demand

“In other words, Chat is a B student in a college economics course.”
Not in my courses.  A C at best.

Supply and demand?  
Real Estate Loans, All Commercial Banks (REALLN)
Real Estate Loans, All Commercial Banks (REALLN) | FRED | St. Louis Fed (stlouisfed.org)

One of the nice things about Chat GPT is that it will tell you how it derives its answers, although its explanations aren’t always very satisfying:
If I asked you how an expansionary monetary policy would impact interest rates would you derive an answer from economic principles, or would your answer be based on the consensus view of books and articles?

As an AI language model, my answers are based on the information and knowledge I was trained on, which includes both economic principles and the consensus view of experts in the field. An expansionary monetary policy typically leads to lower interest rates, as it involves an increase in the supply of money, which puts downward pressure on interest rates. This relationship between monetary policy and interest rates is widely accepted among economists and is backed by macroeconomic theory.

If I asked you whether more new houses are usually purchased during years when house prices are relatively high, or during periods when prices are unusually low, would you search time series data and provide an empirical answer, or would you rely on demand theory?

As an AI language model, I would rely on both demand theory and empirical evidence to answer this question. According to demand theory, during periods of high house prices, people may be less likely to purchase homes because they are more expensive, and instead choose to rent. On the other hand, during periods of low house prices, more people may choose to purchase homes because they are more affordable.
Empirical evidence from various countries and housing markets supports this view, as housing sales tend to be higher during periods of low or declining house prices and lower during periods of high or rapidly rising prices. However, this relationship between house prices and sales is not always straightforward, as other factors such as economic conditions, consumer confidence, and interest rates can also play a significant role in shaping housing demand.

What is the empirical evidence that indicates that housing sales fall when housing prices are high and rise when prices are low?

The empirical evidence that housing sales tend to fall when housing prices are high and rise when prices are low comes from various studies and data analyses of housing markets in different countries over time. This relationship is often referred to as an “inverse relationship” between house prices and sales, as a rise in house prices is typically associated with a fall in sales, and vice versa.

For example, studies have found that in countries such as the United States, the United Kingdom, Australia, and Canada, housing sales tend to decline during periods of rapidly rising house prices, as many potential buyers are priced out of the market or become more cautious about making a purchase. Conversely, sales tend to increase during periods of declining or low house prices, as more people become motivated to purchase a home due to lower prices and more favorable conditions for borrowing.
These findings are based on a variety of data sources, including government statistics on housing sales, surveys of real estate agents and home buyers, and analysis of housing market trends and indicators. By looking at data on housing sales, prices, and economic conditions over time, economists and analysts have been able to identify a general inverse relationship between house prices and sales in many housing markets around the world.

If oil prices rise, what happens to the quantity of oil consumed?
Actually, Chat provides a solid answer to a vague and ambiguous question. I feel bad for your students that lost marks despite good answers because you do not understand why this is a terrible question.
Your question clearly implies a temporal component. It tells the reader: Prices increased. THEN what happens to the quantity consumed? Think about that for a minute. WHY do prices change? Since you obviously aren’t talking about government mandated prices, it MUST be due to a shift in either the demand or supply. If prices increase BEFORE the change in quantity consumed (which you have said is what happens: “what happens to Q [IF prices rise]”), this means it is either due to a negative supply shock, or an ANTICIPATED increase in demand. If prices increased due to a real change in demand rather than anticipated, the price change would come AFTER the increase in quantity consumed.
But in this context, it is still not possible to know which caused the price increase. So, you are forced to either make an assumption (or say you can’t tell). So, one option is to make an assumption and say ceteris paribus, which in this case means we are assuming the demand curve did not shift. Therefore, it was due to a negative supply shock and then you can know quantity decreases.
Think about what your question is asking. It is NOT, “can you tell whether demand or supply curves changed solely from an increase in the equilibrium price?” That’s a clear question. But your question implies a temporal component. Although it is a conditional (“if”), the clear reading is: find the effect of a price increase. Assume prices have increased FIRST, for whatever unexplained reason. Your question asks what happens to the quantity consumed DUE TO (AFTER) A PRICE INCREASE, which is BY DEFINITION a question about the law of demand! As you also commented, “Prices don’t affect demand at all.” And Chat answered correctly! Asking this question without explaining why prices increased makes it even more likely to be interpreted as a question about the law of demand.
Even if you were to assume the first thing to happen was a rightward shift in the demand curve, the logical (and basic common sense!) understanding is that the quantity consumed increases FIRST, THEN PRICES INCREASE as sellers realize demand increased since inventories are being depleted faster. However, the correct answer to your question would STILL be that the quantity consumed DECREASES AFTER PRICES INCREASE (though it will be higher than it was before the initial increase in demand). We should all be able to understand that markets are constantly in flux and demand and supply do not perfectly equate at all times. I would hope you do not penalize students with either the common sense or basic understanding of business practices to know the concept of inventories. Please do not punish your students for having a more advanced understanding and answering accordingly.
Your second question is no better. Adding that “the market is in equilibrium” does not clarify anything, because as I explained above, that critically does not preclude the market subsequently in disequilibrium. You ask “what WILL HAPPEN,” and in no way state the market cannot at any point later be in disequilibrium. But I do agree Chat’s response to that question is confused because it concludes Q decreases, even though it notes supply would increase.