If two people want to rent a room in a house do you charge more for rent?

yes! You charge 20% more. so if you're asking $300 for rent for one room you'd ask $360 for that same room with an additional person. Its the space effect of distribution. The extra person is using up an extra amount of space because in order to get into that room they'd need an easement from the door to the hallway and then into that room. So that'll have an opportunity cost. If the other person is willing to have someone else in their room, they already understand the opportunity cost and were more than willing to accept a second into their space. However, since you are the one renting out the room the cost of renting it will go up based on how many people are using it. It they rented the whole place it would be a fixed price. However, since they're going to create extra 'noise' disturbances it is customary that they pay a little extra for the shared space in someone elses dwelling.