PRC-3 · Chapter 10 · Question 28 of 70
In an attempt to make housing affordable, a city places a strict cap on apartment rents (a price ceiling) well below the market equilibrium. What market condition will this directly cause?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A shortage of available rental apartments
Explanation
A price ceiling set below equilibrium makes renting very cheap (high demand) but unprofitable for landlords (low supply), resulting in a persistent housing shortage.
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