Rent control is an example of a price ceiling.Which of the following problems must be addressed under a rent control program?
A) what to do with the surplus of rental units
B) how to subsidize renters so that they can afford to pay the higher rents
C) how to decrease the quantity of rental units to the equilibrium level
D) whether the opportunity cost of rental units equals the competitive market price
E) how to allocate scarce rental units

Question

Quizplus · Accepted Answer

Rent control creates a shortage of rental units, meaning there is a limited supply of rental units to be allocated among potential renters. This creates the problem of allocating scarce rental units fairly and efficiently. Therefore, E is the best choice.

Rent Control Is an Example of a Price Ceiling