Final answer:
Location equilibrium in urban economics implies that housing prices adjust to reach locational equilibrium.
Step-by-step explanation:
Location equilibrium in urban economics implies that housing prices adjust to reach locational equilibrium. When there is a change in factors such as income, tastes, or businesses expanding, the demand for housing can shift. This shift in demand will affect the equilibrium price and quantity of rental housing in the market. Rent control is a policy that can alter this natural adjustment process. In a situation without rent control, if there's an increase in demand due to higher incomes or changes in preferences, this would typically lead to higher prices and more housing offered in the market. The equilibrium price and quantity of housing are determined by the intersection of supply and demand.
To summarize, locational equilibrium revolves around how housing prices adjust in response to shifts in supply and demand, thus setting a new market equilibrium. As these adjustments take place, they reflect the economic principles of maximizing utility subject to budget constraints and reflect changes in market conditions.