Question

When landlords are prevented by cities from charging market rents, which of the following listed outcomes are common in the long run? Check all that apply.

a.The quantity of available rental housing units falls.
b.Efficient use of housing space results.
c.Landlords earn lower profits from renting housing units, but the rent charged has no d.effect on either the quantity or quality of rental units.
e.The future supply of rental housing units increases.

Answer 1

Rent control policies often result in a decrease in the available rental housing units and lower quality housing, as landlords face reduced profits and invest less in property maintenance. Thus, options (a) and (c) from the list provided are correct.

Step-by-step explanation:

When cities prevent landlords from charging market rents due to rent control policies, several long-run outcomes are commonly observed. First, the quantity of available rental housing units falls, as landlords may convert rental properties into co-ops and condos, or exit the rental market altogether. This reduction in supply can lead to a housing shortage. Secondly, landlords earn lower profits from renting housing units, which often results in them spending less on maintenance and essentials, leading to lower-quality housing. Therefore, options (a) and (c) from the list provided are correct, while options (b), (d), and (e) are not.