A rent control law that imposed a ceiling below the equilibrium rental price could result in:...
A rent control law that imposed a ceiling below the equilibrium rental price could result in:
A) a reduction in the sum of producer and consumer surplus.
B) discrimination.
C) apartment shortages.
D) All of the above
Homework Answers
Answer
Option D
D) All of the above
the price is lower than the equilibrium price so the Qd is higher than the Qs and that creates a shortage which creates a deadweight loss in the market. It also creates discrimination as there is a shortage so the landlords discriminate the renting out as per the consumer.
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A rent control law that imposed a ceiling below the equilibrium
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city government implements a rent ceiling at $600 per month.
In the scenario above, if in addition to the explicit legal
price tenants pay the full potential implicit opportunity costs of
time and trouble associated with the rent ceiling, their loss
resulting from the rent control is $_____ million?
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