-In the figure above, the demand curve shifts rightward from D₀ to D₁ so that D₁ is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be

Question

-In the figure above, the demand curve shifts rightward from D<sub>0</sub> to D<sub>1</sub> so that D<sub>1</sub> is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be A) a shortage and an increase in search costs. B) a shortage and a decrease in search costs. C) a surplus and an increase in search costs. D) a surplus and a decrease in search costs.

Quizplus · Accepted Answer

A rent ceiling below the equilibrium price creates a shortage as quantity demanded exceeds quantity supplied, leading to increased search costs.

-In the Figure Above, the Demand Curve Shifts Rightward from D0

-In the Figure Above, the Demand Curve Shifts Rightward from D₀