Question

The local city council passes a law that establishes a maximum rent for apartments in your city. Which of the following is likely to happen?

A) The quality of apartments will improve.

B) Demand for cheap apartments will increase.

C) Current renters will sublet to others at prices above the legal maximum.

D) Landlords will increase supply in order to make up for lost revenue.

Answer 1

Answer:

The local city council passes a law that establishes a maximum rent for apartments in your city. Which of the following is likely to happen?

Demand for cheap apartments will increase

Explanation:

When there is maximum price set aside for a good or services, the demand for lower goods would be increased. From the analogy above, since the maximum rent as been set aside, then the demand for cheap apartments will increase as a result of the decision because people would prefer lower prices