The figure illustrates the rental housing market, where there is an outward shift in the demand curve. In response, the city authority imposes a rent ceiling of €500. Which of the following statements is correct?Select one:a.In the long run, building more houses would remove the need for the rent ceiling.b.The market clears at €500 with 12,000 houses.c.Removing the rent ceiling leads to an inefficient outcome.d.Banning sub-letting makes the outcome Pareto efficient. Supply curve1,100830500-New demandcurveDemand curve8,0012,000Number of tenanciesHousing rent, €

Price ceiling refers to the government action that is taken to set the maximum price that can be…

Answered: The figure illustrates the rental…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The figure illustrates the rental housing market, where there is an outward shift in the demand curve. In response, the city authority imposes a rent ceiling of €500. Which of the following statements is correct?

Select one:

In the long run, building more houses would remove the need for the rent ceiling.

The market clears at €500 with 12,000 houses.

Removing the rent ceiling leads to an inefficient outcome.

Banning sub-letting makes the outcome Pareto efficient.

Supply curve
1,100
830
500-
New demand
curve
Demand curve
8,00
12,000
Number of tenancies
Housing rent, €

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