Final answer:
An improvement in capital can lead to a rightward shift of the capital supply curve in a rental housing market, resulting in an increase in the quantity of rental housing and a decrease in the rental price.
Step-by-step explanation:
An improvement in capital can affect the capital supply curve and equilibrium rental price in a rental housing market. When there is an improvement in capital, such as an increase in investment or technological advancements, the supply of rental housing increases. This results in a rightward shift of the supply curve, from So to S₁, as shown in Figure 3.21.
As a result, at the new equilibrium E₁, the quantity of rental housing increases to 17,000 units and the rental price decreases to $400. The increase in capital improves the availability of rental housing and leads to a lower rental price.