If the government imposes rent control and it is binding:
A)rent will be set above the equilibrium price.
B)it may result in some landlords leaving the business because they cannot cover costs.
C)it will lead to rental units being higher in quality because landlords are guaranteed a high price.
D)it will create a surplus of housing.

Question

Quizplus · Accepted Answer

If rent control is binding, it will set the price below the equilibrium price, resulting in some landlords leaving the business because they cannot cover their costs. This can lead to a reduction in the supply of housing. None of the other options are likely outcomes of binding rent control.

If the Government Imposes Rent Control and It Is Binding