PRC-3 · Chapter 10 · Question 39 of 70
A strict new law forces landlords to cap apartment rentals at Rs. 10,000 per month (a Price Ceiling), while the natural equilibrium is Rs. 25,000. What is the direct market consequence?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A severe shortage of available apartments
Explanation
A price ceiling set below equilibrium keeps prices artificially low. This encourages massive demand but discourages supply, creating a persistent market shortage.
More Demand, Supply and Market Equilibrium MCQs
- Q41What specific terminology defines the total amount of a commodity physically in existence in a warehouse, as opposed to the amount…
- Q42Due to exceptionally favorable weather, a country produces double the normal harvest of cotton. Assuming demand remains strictly…
- Q43The demand for bricks, cement, and construction cranes only exists because there is a high demand for building new houses. This type of…
- Q44To prevent wild price fluctuations in agriculture, a government establishes a 'Buffer Stock'. What action must the government take if…
- Q45A massive improvement in robotic assembly lines drastically cuts the production cost of televisions. What is the immediate graphical…