One of the consequences of a rent ceiling set below the equilibrium rent is
A) decreased search activity.
B) increased search activity.
C) the establishment of landlord unions.
D) surpluses of apartments.
E) the elimination of the deadweight loss that would otherwise exist in the housing market.

Question

Quizplus · Accepted Answer

When a rent ceiling is set below the equilibrium rent, it creates a shortage of apartments because the price is artificially kept lower than what the market would naturally determine. This leads to increased search activity as more people are interested in renting at the lower price, but there are not enough apartments available to meet the demand.

One of the Consequences of a Rent Ceiling Set Below