The government imposes a maximum price on apartments that is above the equilibrium price. You accurately predict that
A) the law will have no economic impact.
B) the law will create a surplus of apartments.
C) renters will find that landlords start offering to furnish the apartments.
D) landlords are less likely to do routine maintenance work in the apartments.

Question

Quizplus · Accepted Answer

When a maximum price is set above the equilibrium price, it does not interfere with the market's natural dynamics, as the market price would naturally be lower than the imposed maximum. Therefore, the law would not affect the supply and demand balance, leading to no economic impact.

The Government Imposes a Maximum Price on Apartments That Is