A rent control usually sets a price ceiling that is below the equilibrium price and thus:
A)generates surplus.
B)generates shortage.
C)generates inadequate demand.
D)benefits all low-income renters.

Question

Quizplus · Accepted Answer

A rent control that sets a price ceiling below the equilibrium price creates an excess demand or a shortage, as the quantity demanded exceeds the quantity supplied. This results in a long waiting list for rental housing, and landlords may stop investing in new properties or maintaining existing ones as they cannot make a profit under the price ceiling.

A Rent Control Usually Sets a Price Ceiling That Is