A Rent Ceiling Results in a Shortage

question 123

Multiple Choice

A rent ceiling results in a shortage. As a result, which of the following do you expect?

• A) a shortage of applicants for the apartments available
• B) discrimination as tenants choose their landlords, possibly based on race, age, or gender
• C) a black market for apartments whereby higher rents are obtained through various other charges
• D) in the long-run, more and more people will want to become landlords

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Definitions:

Economic Profits

The margin between an organization's complete earnings and its aggregate expenditures, covering both visible and hidden costs.

Implicit Costs

Implicit costs are the opportunity costs of using resources owned by the business for production instead of lending, selling, or renting them out.

Accounting Profits

The net income for a company determined by subtracting total expenses from total revenues, according to generally accepted accounting principles (GAAP).

Short Run

A period of time during which at least one factor of production is fixed, usually considered in economic models and analyses.