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26 October, 09:37

A binding price ceiling for apartments (effective rent control) will:

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  1. 26 October, 09:45
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    Answer: lead to a shortage cause quantity demanded exceeds quantity supplied of rental housing.

    Explanation: A price ceiling is a government regulated price control that sets the legal maximum price that can be charged for a good. The price ceiling is binding when it is set below the equilibrium price. In this situation, the price ceiling prevents the forces of demand and supply to intersect at the equilibrium price. At the ceiling price, demand for the good is greater than its supply. Thus, an effective price ceiling which is set below the equilibrium price creates a shortage in the market.
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