If a rent ceiling imposed by the government is greater than the equilibrium rent for housing,then
A)the supply of rental housing will increase.
B)a shortage of housing will occur.
C)a surplus of housing will occur.
D)the equilibrium rent will prevail as long as all else remains constant.
E)the equilibrium rent will rise.

Question

Quizplus · Accepted Answer

If the rent ceiling imposed by the government is greater than the equilibrium rent for housing, it means that the rent ceiling is above the market-clearing price. As a result, there is no effective ceiling on rents, and the equilibrium rent will be prevailing. In other words, the market will continue to operate as it did before the rent ceiling, and the equilibrium rent will not change as long as all else remains constant.

If a Rent Ceiling Imposed by the Government Is Greater