Rent Control Applies to About Two-Thirds of the Private Rental

question 158

Multiple Choice

Rent control applies to about two-thirds of the private rental housing in New York City. Economic theory suggests that the below-equilibrium prices established by rent controls would

• A) create a surplus of rental housing.
• B) promote a rapid increase in the future supply of housing.
• C) result in poor service and quality deterioration of many rental units.
• D) lead to a reduction in housing discrimination against minorities.

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Definitions:

Income Increases

A situation where an individual's or household's earnings rise, leading to potential changes in spending behavior.

Utility Maximizing

The economic principle that individuals or firms seek to achieve the highest level of satisfaction or profit from their consumption or production choices.

Budget Constraint

The limit on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.

Inferior Good

A type of good for which demand decreases as the consumer's income increases, contrasting with normal goods.