Recall the application on rent control and mismatches.Under rent control,the government sets a maximum price for housing,decreasing the quantity supplied and the total value of the market.Rent control and other maximum prices cause ________ possibly ________.

Question

Quizplus · Accepted Answer

Rent control and other maximum prices cause inefficiency as they lead to a shortage of housing, reducing the quantity supplied and creating a mismatch between the amount of housing demanded and supplied. This can result in excess demand, longer wait times, and lower-quality housing for renters. Additionally, rent control can disrupt market equilibrium by distorting price signals and reducing incentives for landlords to maintain and invest in their properties.

Recall the Application on Rent Control and Mismatches