Rent controls create all of the following EXCEPT:
A) shortages.
B) search costs.
C) wasteful quality increases.
D) resource misallocations.

Question

Quizplus · Accepted Answer

Rent controls can lead to shortages in the housing market as landlords reduce the supply of rental units. This shortage creates search costs for tenants who must spend more time and resources to find an apartment. Rent controls also encourage resource misallocations, as landlords may stop investing in their properties due to the lower profits, leading to a decline in maintenance and quality. However, rent controls do not create wasteful quality increases as they do not incentivize landlords to improve the quality of their rental units beyond what is necessary to meet the rent control regulations.

Rent Controls Create All of the Following EXCEPT