A Rent Ceiling Creates a Shortage

question 224

Multiple Choice

A rent ceiling creates a shortage. As a result, which of the following occurs?

• A) only a loss of consumer surplus for tenants
• B) only a loss of producer surplus for landlords
• C) a loss of both consumer and producer surplus
• D) a gain of both consumer and producer surplus

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Definitions:

Net Passive Loss

The total loss from passive activities, exceeding the income from those activities, that cannot usually offset other types of income for tax purposes.

Not a Passive Activity

Activities that involve significant participation and management by the taxpayer, hence not qualifying for tax treatments as passive activities.

Business Loss

A financial state where business expenses exceed its revenue, which can affect tax liabilities.

Deduct

To subtract or take away from the gross amount; in taxation, to lower taxable income by subtracting allowable deductions.