Question

A rent ceiling set below the equilibrium rent a. ensures the availability of enough low-rent apartments in a city. b. results in all renters and potential renters being better off. c. creates a situation in which the quantity demanded of housing is greater than quantity supplied. d. ensures that landlords earn a reasonable rate of profit on apartments. e. eliminates discrimination by landlords.

Answer 1

Answer:

c. creates a situation in which the quantity demanded of housing is greater than quantity supplied.

Explanation:

A rent ceiling set below the equilibrium rent creates a situation in which the quantity demanded of housing is greater than quantity supplied.

Price ceiling creates a situation where quantity demanded exceeds quantity supplied because suppliers (landlords) will be unwilling to sell products or services at a price lower than the equilibrium price which will immediately create a shortfall in supply, while consumers (tenants)  will be eager to rent at a price lower than the equilibrium price BUT due to shortage of supply, the quantity demanded now exceeds the available quantity supplied

Answer 2

Answer:

C) creates a situation in which the quantity demanded of housing is greater than quantity supplied.

Explanation:

A rent ceiling or really any type of binding price ceiling results in a deadweight loss or loss of economic efficiency. Since the equilibrium price is set below the equilibrium quantity, the quantity demanded will increase, while the quantity supplied will decrease. This results in a shortage of apartments for rent and a loss of total economic efficiency represented by the colored areas between the demand curve and supply curve left of the equilibrium price.