Rent control is
A) a situation where a price floor exists.
B) the same as a minimum wage.
C) the same as a subsidy to landlords.
D) a situation where a price ceiling exists.
E) a situation where equilibrium persists.

Question

Quizplus · Accepted Answer

Rent control refers to a government-imposed price ceiling on rental rates, below the equilibrium market price, to make housing more affordable for tenants. Therefore, it is a situation where a price ceiling exists. Option A is incorrect because a price floor is the minimum price that can be charged for a good or service, while rent control limits the maximum price that can be charged. Option B is incorrect because minimum wage is the lowest wage rate that an employer can legally pay to workers, and it is unrelated to rent control. Option C is incorrect because a subsidy is a financial aid or support given by the government to individuals or businesses, and it is also unrelated to rent control. Option E is incorrect because rent control creates a situation where the quantity demanded of rental housing exceeds the quantity supplied, resulting in shortages or imbalances in the rental market, which is not an equilibrium state.

Rent Control Is