Question

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price.When cities prevent landlords from charging market rents, which of the following are common long-run outcomes?1. The quality of rental housing units falls2. The future supply of rental housing units increases3. The quantity of available rental housing units falls4. Efficient use of housing space resultsBriefly explain why or why not for each scenario.

Answer 1

Answer:

The answer is: 3. The quantity of available rental housing units falls

Explanation:

Rent control is a type of price ceiling, where the price of a product is artificially lowered below the equilibrium price.

Whenever a price ceiling is introduced, the quantity supplied of products or services will decrease. That happens because as the price of a product increases, suppliers are willing to offer a larger quantity of that product. But if the price of a product decreases, suppliers will be willing to offer smaller quantities of that product. (Law of Supply).