How do price ceilings in the rental housing market affect tenants?
A)Since price ceilings keep rents from rising above a certain level,the net gain to tenants is positive.
B)Tenants are worse off from price ceilings since the supply of rental housing falls in the long run.
C)Tenants benefit from price ceilings since landlords have incentives to improve the quality of existing rental housing
D)Since the supply of rental housing is inelastic in the short run,tenants are not affected by a price ceiling.

Question

Quizplus · Accepted Answer

Price ceilings in the rental housing market usually lead to a decrease in the quantity and quality of available rental housing. Landlords may reduce investment in maintenance and improvements, or convert rental units into other uses. As a result, tenants face reduced options, longer waiting lists, lower quality housing, and potentially higher non-price costs like transportation or utility costs. While rental prices may be kept artificially lower by the price ceiling, the net impact on tenants is negative in the long run.

How Do Price Ceilings in the Rental Housing Market Affect