Rent control applies to about two-thirds of the private rental housing in New York City. Economic theory suggests that a below-equilibrium price established by rent control:
A) creates a surplus of rental housing.
B) promotes a rapid increase in the future supply of housing.
C) results in poor service and quality deterioration of many rental units.
D) leads to a reduction in housing discrimination against minorities.

Question

Quizplus · Accepted Answer

Economic theory suggests that establishing a price ceiling below equilibrium price leads to a shortage of rental housing. Landlords have little incentive to maintain or improve the quality of units due to the artificially low rent. This can lead to poor service and quality deterioration of many rental units over time.

Rent Control Applies to About Two-Thirds of the Private Rental