Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price. When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply. Black markets develop. Landlords earn lower profits from renting housing units, but the rent charged has no effect on either the quantity or quality of rental units. The quality of rental housing units falls. Efficient use of housing space results.

Question

Charlize

Business

13 June, 18:48

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price. When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply. Black markets develop. Landlords earn lower profits from renting housing units, but the rent charged has no effect on either the quantity or quality of rental units. The quality of rental housing units falls. Efficient use of housing space results.

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Answers (1)

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Elijah Stanton · Answer 1

Black markets develop. The quality of rental housing units falls.

Explanation:

If demand is greater than supply, economic scarcity occurs. In the case of the issue, the situation described contributes to this imbalance between supply and demand, as there is an external rent control force that forces homeowners to price apartments below the equilibrium level. Thus scarcity can cause unwanted effects such as the emergence of black markets, illegal negotiations with higher prices and quality than the traditional scenario, which would result in lower quality of rented housing due to the low price.