In Your City, It Is Illegal to Charge More Than

question 135

Multiple Choice

In your city, it is illegal to charge more than a certain amount of money for an apartment. People have been signing leases for the highest legal amount, but also agreeing to pay a monthly bribe "on the side" to their landlord in order to get the apartment in the first place and to get timely maintenance. What is the effect of the bribes?

• A) The bribes make it harder to find an apartment.
• B) The bribes cause there to be unexploited gains from trade.
• C) The bribes cause apartments to be allocated to renters who do not have the highest-valued use of the apartments.
• D) The bribes minimize the damage from the rent control.