Suppose the government imposes a price ceiling on rental housing that is below the market-clearing price.The resulting shortage will be
A)greater the more recently the controlled price went into effect.
B)smaller the longer the controlled price has been in effect.
C)greater the more elastic the demand for rental housing.
D)smaller the more elastic the demand for rental housing.
E)diminished over time.

Question

Quizplus · Accepted Answer

A more elastic demand for rental housing means that consumers are more responsive to price changes, leading to a larger shortage when the price is kept artificially low by a ceiling.

Suppose the Government Imposes a Price Ceiling on Rental Housing