Suppose that the average equilibrium monthly rental price of apartments and rooms in a college town had been steady at $600, but then the college expanded enrollment from 10,000 to 12,000, and suddenly there was a shortage of rental housing at the prevailing price of $600 . Which of the following is most likely to be true?
a. The shortage occurred because demand increased, and a new market equilibrium will feature higher rental prices and more rental units available on the market.
b. The shortage occurred because demand decreased, and a new market equilibrium will feature lower rental prices and fewer rental units available on the market.
c. The shortage occurred because demand increased, and a new market equilibrium will feature higher rental prices and fewer rental units available on the market.
d. The shortage occurred because supply increased, and a new market equilibrium will feature lower rental prices and fewer rental units available on the market.
a
You might also like to view...
Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is
A) increasing. B) decreasing. C) constant. D) negative.
At the point on the demand curve at which marginal revenue = 0, the absolute value of the coefficient of the price elasticity of demand is:
A) > 1. B) = 1. C) < 1. D) = 0.