Multiple Choice
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. Suddenly there is 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 result in higher rental prices and more rental units available on the market.
B) The shortage occurred because supply increased, and a new market equilibrium will result in lower rental prices and fewer rental units available on the market.
C) The shortage occurred because demand decreased, and a new market equilibrium will result in lower rental prices and fewer rental units available on the market.
D) The shortage occurred because demand increased, and a new market equilibrium will result in higher rental prices and fewer rental units available on the market.
Correct Answer:
Verified
Correct Answer:
Verified
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