Asked by arjun trivedi on Jun 19, 2024
Verified
If the government sets out to help low-income people by establishing a maximum amount that can be paid for rent:
A) a price floor has been set,and a shortage of rental units may occur.
B) a price ceiling has been set,and a shortage of rental units may occur.
C) in the long run,more rental units will appear.
D) the quality of rental units will be inefficiently high.
Price Ceiling
A price ceiling is a government-imposed limit on the price that can be charged for a product or service, intended to prevent prices from rising too high.
Low-Income People
Individuals or groups who earn significantly less than the average income level in their society.
- Master the concepts and ramifications of price boundaries, including ceilings and floors, in the trade of goods and services.
- Acknowledge the theoretical foundations and tangible effects of enforcing price ceilings within real estate markets, particularly regarding rent control measures.
Verified Answer
EO
emmanuel onyeagbaJun 20, 2024
Final Answer :
B
Explanation :
When the government sets a maximum amount that can be paid for rent, it is establishing a price ceiling. This can result in a shortage of rental units as landlords may not be willing to rent out their units for the lower price, leading to a decrease in the quantity supplied. In the long run, it may be possible for more rental units to appear, but this is not guaranteed. The quality of rental units is not necessarily related to the establishment of a price ceiling.
Learning Objectives
- Master the concepts and ramifications of price boundaries, including ceilings and floors, in the trade of goods and services.
- Acknowledge the theoretical foundations and tangible effects of enforcing price ceilings within real estate markets, particularly regarding rent control measures.
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