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?

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