With a rent ceiling set below the equilibrium rent, i. all renters are able to rent apartments at a lower rent.
Ii. there is a shortage of apartments.
Iii. the quantity of apartments supplied does not change because buildings cannot be moved.
A)i only
B)ii only
C)iii only
D)ii and iii
E)i, ii, and iii

Question

Quizplus · Accepted Answer

Option i is incorrect because although some renters may be able to rent at a lower rent, the shortage of apartments means that not all renters will be able to. Option iii is incorrect because the quantity of apartments supplied will decrease as landlords will not find it profitable to rent out their apartments at the lower rent ceiling. Option ii is correct because a rent ceiling set below the equilibrium rent creates a situation where the quantity demanded exceeds the quantity supplied, resulting in a shortage of apartments.

With a Rent Ceiling Set Below the Equilibrium Rent, I