Which of the following must occur as a result of ceilings on apartment rents that are set below market clearing rental rates?
A) Property owners respond to the ceilings by increasing maintenance and repairs.
B) Property owners respond to the ceilings by constructing new apartment buildings.
C) There is a decrease in the quantity of apartments that prospective tenants wish to rent.
D) There is a decrease in the quantity of apartments that property owners offer for rent.

Question

Quizplus · Accepted Answer

When ceiling on apartment rents is set below the market clearing rental rates, property owners may not find it profitable to continue offering apartments for rent. This may result in a decrease in the quantity of apartments that property owners offer for rent. Option A is incorrect because property owners may choose to reduce maintenance and repairs if they are not able to cover their costs. Option B is incorrect because property owners may not find it profitable to construct new apartment buildings if the rents are ceilinged. Option C is incorrect because tenants may still demand apartments at lower rental rates, even below market clearing rates, and may be willing to queue or accept lower quality properties.

Which of the Following Must Occur as a Result of Ceilings