New Equilibrium Following an Increase in Demand

In a credit market with a single lender and three active borrowers, each borrower's project generates a total output normalized to 1. The lender receives an identical share, 's', from each of the three borrowers, while each borrower keeps the remaining portion (1-s) of their own output. What is the minimum share 's' required for the lender's total income to be at least as large as the income of any single borrower?

A city's university unexpectedly doubles its student enrollment for the upcoming academic year, causing a sudden, massive influx of students seeking rental apartments. Given that constructing new apartment buildings takes several years, what is the most likely immediate effect on the city's rental housing market?

Impact of a Supply Shock on a Rental Market

Explaining Rent Spikes in a Booming City

If a city experiences a sudden 50% increase in average rental prices due to a surge in demand, it is reasonable to expect a similarly large (e.g., 40-50%) increase in the number of available rental units within the following month.

A major hurricane renders 20% of the housing in a large coastal city uninhabitable. Many displaced residents seek temporary housing in a nearby, undamaged city of a similar size. Which of the following outcomes is the most likely immediate effect on the rental market of the undamaged city, and what economic principle does it best illustrate?

Evaluating a Rent Subsidy Policy

A city government announces a new program offering a significant financial incentive for people to move to the city, effective immediately. An economist predicts that within the next six months, this will lead to a substantial rise in average rental prices but only a marginal increase in the number of occupied rental units. Which of the following principles provides the best explanation for this prediction?

Evaluating a City's Housing Policy Proposal

Evaluating Housing Policy Proposals

Explaining Rent Spikes in a Booming City