When a Tenant in a Rent-Controlled Apartment Sublets the Apartment

question 56

Essay

When a tenant in a rent-controlled apartment sublets the apartment to another renter at a rent higher than the price ceiling:
A.it is inefficient.
B.we say that the transaction takes place on a black market.
C.there is an increase in quantity demanded.
D.there is a decrease in quantity demanded.

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Definitions:

Marginal Cost

The cost of producing one additional unit of a good or service, often considered in decision-making about production levels.

Marginal Revenue

The additional income earned from selling one more unit of a good or service; it's a crucial concept for decision-making in businesses.

Economic Profit

The total revenue of a business minus its explicit and implicit costs, representing the surplus remaining after accounting for all costs, including opportunity costs.

Accounting Profit

The net income of a company after subtracting all costs and expenses from total revenues, as shown in the financial statements.