A rent ceiling creates a shortage. As a result, which of the following occurs?

A. only a loss of consumer surplus for tenants

B. a gain of both consumer and producer surplus

C. only a loss of producer surplus for landlords

D. a loss of both consumer and producer surplus

Question

India Lam

Business

9 May, 22:46

A rent ceiling creates a shortage. As a result, which of the following occurs?

A. only a loss of consumer surplus for tenants

B. a gain of both consumer and producer surplus

C. only a loss of producer surplus for landlords

D. a loss of both consumer and producer surplus

+2

Answers (1)

Know the Answer?

Baron Choi · Answer 1

C. only a loss of producer surplus for landlords

Explanation:

When there is a rent ceiling it refers to the situation that the government of the state puts a limit on the amount that can be charged as a rent from the people taking property on rent for the landlord.

As with this, there arises the shortage, as the landlords are not comfortable lending the property to tenants at such rate.

There is a loss for landlords only. As they are not ready to lend at such rate and that the property remains vacant. And there is no income, rather if rented it would earn low income.

A rent ceiling creates a shortage. As a result, which of the following occurs?A. only a loss of consumer surplus for tenantsB. a gain of both consumer and producer surplusC. only a loss of producer surplus for landlordsD. a loss of both consumer and producer surplus

A rent ceiling creates a shortage. As a result, which of the following occurs?

A. only a loss of consumer surplus for tenants

B. a gain of both consumer and producer surplus

C. only a loss of producer surplus for landlords

D. a loss of both consumer and producer surplus