-A rent ceiling creates a deadweight loss
A) if it is set below the equilibrium rent.
B) if it decreases the taxes the government collects in the housing market.
C) if it is set equal to the equilibrium rent.
D) if it set above the equilibrium rent.
E) never, because if it did create a deadweight loss, the government would not impose it.

Question

-A rent ceiling creates a deadweight loss
A) if it is set below the equilibrium rent. 
B) if it decreases the taxes the government collects in the housing market. 
C) if it is set equal to the equilibrium rent. 
D) if it set above the equilibrium rent. 
E) never, because if it did create a deadweight loss, the government would not impose it.

Quizplus · Accepted Answer

A rent ceiling set below the equilibrium rent leads to a shortage of housing because the quantity demanded exceeds the quantity supplied at that price, causing inefficiencies and a deadweight loss in the market.

-A Rent Ceiling Creates a Deadweight Loss