Which of the following is one of the functions of rental prices?
A) To redistribute income from landlords to renters
B) To redistribute income from renters to landlords
C) To signal to the local government when taxes on rental units should be increased
D) To ration the use of existing housing for current consumers

Question

Quizplus · Accepted Answer

Rental prices serve the function of rationing the use of existing housing for current consumers. This means that as demand for housing increases, prices rise, ensuring that only those who can afford to pay the higher prices are able to rent the available units, while those who are unwilling or unable to pay are forced to seek alternative housing options. This helps to balance supply and demand in the housing market and prevents overcrowding and shortages of rental units. Options A and B are not accurate, as rental prices do not necessarily involve income redistribution between landlords and renters, but rather reflect market forces of supply and demand. Option C is also not accurate, as rental prices do not directly signal to the local government when taxes on rental units should be increased.

Which of the Following Is One of the Functions of Rental