PRC-3 · Chapter 10 · Question 8 of 70
The government imposes a legal 'price ceiling' on apartment rentals to keep them affordable for low-income families, setting the maximum rent below the natural market equilibrium. What is the primary unintended consequence of this policy?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A severe shortage of available apartments
Explanation
A price ceiling set below equilibrium leads to high demand but low supply, resulting in a persistent market shortage.
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