A rent ceiling set below the equilibrium rent
A) ensures the availability of enough low-rent housing in a city.
B) ensures that landlords earn a reasonable rate of profit on housing.
C) creates a situation in which the quantity demanded of housing is greater than quantity supplied.
D) eliminates discrimination by landlords.
E) results in all renters and potential renters being better off.

Question

Quizplus · Accepted Answer

By setting a rent ceiling below the equilibrium rent, the price that landlords can charge for rental housing is capped. This creates a situation in which the quantity demanded of housing is greater than quantity supplied, which leads to a shortage of available housing. This shortage can result in long waiting lists, black markets, or other undesirable outcomes. However, this policy may benefit some renters by reducing the cost of housing, but overall it is likely to result in more harm than good.

A Rent Ceiling Set Below the Equilibrium Rent