If the government sets out to help low-income people by establishing a maximum amount that can be paid for rent:
A)a price floor has been set,and a shortage of rental units may occur.
B)a price ceiling has been set,and a shortage of rental units may occur.
C)in the long run,more rental units will appear.
D)the quality of rental units will be inefficiently high.

Question

Quizplus · Accepted Answer

When the government sets a maximum amount that can be paid for rent, it is establishing a price ceiling. This can result in a shortage of rental units as landlords may not be willing to rent out their units for the lower price, leading to a decrease in the quantity supplied. In the long run, it may be possible for more rental units to appear, but this is not guaranteed. The quality of rental units is not necessarily related to the establishment of a price ceiling.

If the Government Sets Out to Help Low-Income People by Establishing