A rent ceiling set below the equilibrium rent

1 answer:

4 0

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

<u>Option: C</u>

<u>Explanation:</u>

Rent limit is the highest price a property owner can demand for rent. Rent ceilings are typically fixed by legislation and limit how high the rent can be in a given area. Although, the amount of affordable housing is also reduced as a consequence of this rule, as tenants are not interested in renting out their properties at a cheap price.

Nevertheless, if the limit is placed underneath the level of equilibrium then a reduction of deadweight is produced. Many issues come in the form of illegal markets, scanning time and charges that aren't leased precisely like key money i.e. high initial cost for new keys.

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Breakeven=fixed cost/selling price - variable cost

so 14,300000/380-250

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