The Following Questions Refer to the graph below.
-If the supply and demand for rental housing are DD and SS,what effect will a rent control law that sets the maximum allowable rent at $400 have on the market? It will lead to

Question

The Following Questions Refer to the graph below. 
-If the supply and demand for rental housing are DD and SS,what effect will a rent control law that sets the maximum allowable rent at $400 have on the market? It will lead to

Quizplus · Accepted Answer

Based on the graph, the intersection of the DD and SS lines occurs at a rent of $500 and a quantity of 15,000 units. However, with the rent control law in place, the maximum allowable rent is now $400, which is below the equilibrium rent. This means that some landlords will not be willing to supply rental units at the lower rent, resulting in a decrease in quantity supplied. At the same time, demand for rental housing will likely increase since the lower rent makes it more affordable for some renters. This results in a shortage of rental units, with the quantity demanded exceeding the quantity supplied by 10,000 units. Therefore, the correct answer is D, a shortage of 10 thousand units.

The Following Questions Refer to the Graph Below