Refer to the above graph, which shows the supply and demand for rental housing in a city.Given the demand D₁ and the supply S₁ for rental housing, if the government established rent controls in the city at below the equilibrium, then the price of housing would most likely be at:

Question

Quizplus · Accepted Answer

If rent controls are established below the equilibrium, the price of housing would be at PS1U1B11S1U1B0, which is below the equilibrium price. This would create a shortage of rental housing because the quantity demanded (QD1U1B11S1U1B0) would exceed the quantity supplied (QS1U1B11S1U1B0).

Refer to the Above Graph, Which Shows the Supply and Demand