The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month.
-As shown in the figure above,the rent ceiling
A) decreases consumer surplus.
B) increases producer surplus.
C) decreases deadweight loss.
D) increases the quantity of housing rented.
E) is efficient.

Question

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month.
-As shown in the figure above,the rent ceiling
A) decreases consumer surplus. 
B) increases producer surplus. 
C) decreases deadweight loss. 
D) increases the quantity of housing rented. 
E) is efficient.

Quizplus · Accepted Answer

Rent ceilings, set below the equilibrium price, lead to a decrease in consumer surplus because they create shortages and reduce the overall quantity of housing available. This makes it harder for consumers to find housing, thus reducing their benefit or surplus.

The Figure Above Shows the Supply and Demand Curves in the Market