Over the next few years, several newly constructed office blocks will become available at the World Trade Center site. As well, economists expect the New York economy will continue to exhibit modest growth. What is the expected outcome for the office space market in downtown Manhattan?
A) Unambiguously higher equilibrium rental rates and quantity
B) Unambiguously lower equilibrium rental rates and quantity
C) Unambiguously higher rental rates, and equilibrium quantity could be higher or lower
D) Unambiguously higher equilibrium quantity, and equilibrium rental rates could be higher or lower

Question

Quizplus · Accepted Answer

The increase in office space supply will likely increase the equilibrium quantity. However, with modest economic growth, rental rates could either increase due to higher demand or decrease due to increased supply.

Over the Next Few Years, Several Newly Constructed Office Blocks