Rent ceilings set below the equilibrium rent
i.create a deadweight loss.
ii.increase search activity.
iii.encourage landlords to charge a high price for new locks and keys,called "key money."
A) i only
B) ii only
C) i and iii
D) i and ii
E) i, ii, and iii

Question

Quizplus · Accepted Answer

Rent ceilings below equilibrium rent create a deadweight loss by reducing the quantity of housing available. They increase search activity as people spend more time looking for housing. Landlords may charge "key money" as a way to circumvent rent controls and extract more money from tenants.

Rent Ceilings Set Below the Equilibrium Rent