Which of the following statements about the effects of rent control is correct?

Question

Quizplus · Accepted Answer

Rent control creates a price ceiling below the market equilibrium rent, which reduces the quantity of housing supplied to the market in the long run. In the short run, landlords may continue to rent out their existing apartments or homes, but they may be reluctant to maintain or improve them because they cannot charge higher rents to cover their costs. As a result, the short-run effect of rent control is a relatively small shortage of apartments. However, in the long run, landlords will respond by converting their apartments to other uses, such as condos or short-term rentals, or by reducing the supply of rental units, as they can no longer make a profit to cover their expenses. This will lead to a larger shortage of apartments in the long run.

Which of the Following Statements About the Effects of Rent