A Ceiling Price Set in the Policy of Rent Controls

question 100

Multiple Choice

A ceiling price set in the policy of rent controls:

• A) will be set at a price above the equilibrium price.
• B) may result in some people who rent out units to leave the business because they cannot cover costs.
• C) will lead to rental units being higher in quality because landlords are guaranteed a high price.
• D) will create a surplus of housing.

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Definitions:

Price Takers

Participants in a market who accept the prevailing market price because they do not have enough power to influence it.

Market

A place or platform where buyers and sellers come together to trade goods, services, or financial instruments.

Monopoly

A market structure characterized by a single seller, selling a unique product in the market with restrictions on the entry of new firms.

Law of Demand

An economic principle stating that as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa, holding all else constant.