Question

Price ceilings have been used to help renters in expensive areas by keeping rents artificially low. Though this helps some renters, there are costs associated with this practice too. Place a check next to all of the items below that describe possible consequences resulting from rent control. Select all that apply.

A. The development of Black Markets
B. The requirement of nonrefundable cleaning deposits.
C. Reductions in apartment quality.
D. An increased emphasis on informal connections in allocating apartments.
E. The requirement of nonrefundable key deposits.
F. An increased level of subletting.

Answer 1

Out of the options in question, those resulting from price ceilings are all applicable

Step-by-step explanation:

Price ceilings are the same as limits on prices government imposed to restrict the maximum price for an item. For examples. Since the target price is below the consumer justification level, production is below demand, causing a shortage for that commodity in the economy.

• Black market growth (due to a disparity between production and consumption)
• The need for non-refundable deposits for cleaning (a way of ensuring that no abuse happens due to low rents)
• House quality decreases (as low rental incentives to maintain apartment quality will reduce the incentive of the owner)
• Emphasis on unofficial ties (so that proprietors that are not prepared to accept low rents may attract acceptable buyers)
• Non-refundable deposit conditions (to ensure that owners have more than the cheap housing)
• Improved swap rates (due to low rents, homeowners could either rent or remove their apartments because their profits were higher)