When rent controls are imposed below the current market price they can do all except
A) increase the quantity of rental housing demanded.
B) reduce the quality of rental housing.
C) reduce the level of supply of rental housing.
D) create excess supply of rental housing.

Question

Quizplus · Accepted Answer

Rent controls set below the current market price can lead to an increase in the quantity of rental housing demanded (A), reduce the quality of rental housing as landlords may invest less in maintenance (B), and reduce the level of supply of rental housing as it becomes less profitable for landlords (C). However, they do not create an excess supply of rental housing; instead, they typically create a shortage, as the quantity demanded exceeds the quantity supplied at the controlled price.

When Rent Controls Are Imposed Below the Current Market Price