If a city government enacts a maximum price on rent,
A) quantity supplied will decrease.
B) quantity demanded will increase.
C) allocational problems develop.
D) All of the above.

Question

Quizplus · Accepted Answer

When a city government enacts a maximum price on rent, it typically leads to a decrease in the quantity supplied as landlords may find it less profitable to rent out their properties. Simultaneously, the quantity demanded will increase because lower prices make renting more affordable to a larger number of people. This mismatch between supply and demand can lead to allocational problems, such as shortages and potentially a black market for rentals.

If a City Government Enacts a Maximum Price on Rent