As shown in the figure given below, when a government sets a rent ceiling at $750 per month, the result is a(n) :

Question

As shown in the figure given below, when a government sets a rent ceiling at $750 per month, the result is a(n):

Quizplus · Accepted Answer

When a government sets a rent ceiling below the market equilibrium price (in this case, $750 per month), a shortage of rented apartments results because the quantity demanded by tenants exceeds the quantity supplied by landlords. As a result, some prospective renters will be unable to find an apartment at the legal rent ceiling and might have to settle with their second choice or live with roommates. This also means that some landlords might opt to reduce the quantity and quality of their rental properties, as they are unable to charge a higher price in response to increased demand. Therefore, option C correctly describes the market outcome after the implementation of a rent ceiling.

As Shown in the Figure Given Below, When a Government