Asked by
Chandra Smith
on Oct 26, 2024
Verified
If the government imposes binding rent control:
A) rent will be set above the equilibrium price.
B) it may result in some landlords leaving the business because they cannot cover costs.
C) it will lead to rental units being higher in quality because landlords are guaranteed a high price.
D) it will cause a surplus of housing.
Binding Rent Control
A regulation that sets a maximum price for rented property below the market equilibrium price, leading to a shortage of available rental units.
Landlords Leaving
The phenomenon where property owners exit the rental market, which can be due to various factors including regulatory changes or shifts in market conditions.
- Determine the outcomes of implementing price ceilings, such as market inefficiencies and the adverse effects on consumer and producer welfare.
- Grasp the theoretical impacts and actual outcomes of price caps in the housing industry, focusing on rent regulations.
Verified Answer
SP
Learning Objectives
- Determine the outcomes of implementing price ceilings, such as market inefficiencies and the adverse effects on consumer and producer welfare.
- Grasp the theoretical impacts and actual outcomes of price caps in the housing industry, focusing on rent regulations.