A rent ceiling on housing creates a problem of allocating the available housing units because
A) the demand for housing decreases and the demand curve shifts leftward.
B) the supply of housing increases and the supply curve shifts rightward.
C) a shortage of apartments occurs.
D) a surplus of apartments occurs.
E) it eliminates search, which is one of the major ways housing units are allocated.

Question

Quizplus · Accepted Answer

A rent ceiling sets a maximum price that landlords can charge for rent, which is often below the market equilibrium price. This creates a situation where more people are willing and able to rent apartments than there are apartments available at that price. As a result, a shortage of apartments occurs because not everyone who wants an apartment can get one. This shortage means that the available housing units must be allocated in some way, leading to problems of housing allocation.

A Rent Ceiling on Housing Creates a Problem of Allocating