An unintended consequence of attempting to solve a housing shortage by instituting rent controls is that: the supply of apartments decrease while the demand for apartments increases. the supply of apartments increases while the quantity demanded of departments decreases. the quantity supplied of apartments increases while the quantity demanded of apartments decreases the supply of apartments increases while the demand for apartments decreases. the quantity supplied of apartments decreases while the quantity demanded of apartments increases.
I'm reviewing for a final and I'm stuck between the answer choices of "the supply of apartments decrease while the
A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between the buyers and sellers at a mutually agreed price level between them. The market equilibrium is obtained at the intersection of the demand for money and the supply of money in the economy. At this point of intersection, there will be no excess demand or excess supply in the economy. At the point of equilibrium, the corresponding price will be the equilibrium price and the quantity will be the equilibrium quantity in the economy.
The rent control is the law which sets the cap on rents. The rent control sets the maximum rent that the owner can charge from the tenants for staying in the house. The increase in the rent of the rental houses in the economy causes the housing unaffordable for the poor people. The rent control law was introduced to correct this issue. The rent control law determines the maximum rent that the owner can charge from the tenants in the economy. This reduces the rent below the equilibrium level and that means the rent control acts as a price ceiling and the impact of price ceiling is the shortage in the economy. Thus, there will be a large number of consumers demanding for the cheap apartments for rent in the economy with the rent control which causes the shortage in the economy.
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