Which One of the Following Is Likely to Be the Outcome

question 104

Multiple Choice

Which one of the following is likely to be the outcome of a rent ceiling imposed below the equilibrium rent?

• A)a black market for rent-controlled housing
• B)long waiting lists of potential suppliers for rent-controlled housing
• C)a surplus of housing
• D)no search activity
• E)Both A and B are correct.

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Definitions:

Economic Profit

Profit that accounts for both explicit costs and opportunity costs.

Economic Profit

The financial gain made in a transaction after subtracting both the explicit and implicit costs.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in proportion to the level of output or activity in a business.