Assume that there is a dramatic drop in the demand for retail space in Kristiansand due to the

Cov-19 virus. By means of the DiPasquale-Wheaton (4Q-model):

a) Illustrate and discuss what will be the long run effect on prices, construction activities and level of rent in the retail space market in Kristiansand. State your assumption:

b) Comparing the new equilibrium situation with the initial equilibrium, has the rent-price ratio changed? Explain. What would you consider to be a more realistic scenario?