Rent controls typically lead to a reduction in both consumer surplus and producer surplus because they create a deadweight loss by distorting the market equilibrium. This results in fewer apartments being available for rent than would be the case in an uncontrolled market, harming both landlords (producers) and potential renters (consumers).

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Rent Controls Cause

Question 61

Multiple Choice

Rent controls cause:

A) an expansion of both consumer surplus and producer surplus due to a deadweight loss
B) an expansion of consumer surplus and reduction in producer surplus due to a deadweight loss
C) a reduction of both consumer surplus and producer surplus due to a deadweight loss
D) a reduction of consumer surplus and expansion of producer surplus due to a deadweight loss
E) no change in consumer surplus or producer surplus

Correct Answer: