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 ________ consumer surplus and ________ producer surplus.
A) decreases; decreases
B) decreases; increases
C) increases; increases
D) increases; decreases
E) decreases; does not change

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 ________ consumer surplus and ________ producer surplus.
A) decreases; decreases 
B) decreases; increases 
C) increases; increases 
D) increases; decreases 
E) decreases; does not change

Quizplus · Accepted Answer

A rent ceiling typically decreases both consumer and producer surplus because it creates a shortage by setting a price below the equilibrium, leading to inefficiencies in the market.

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