Final answer:
True. A limited amount of available real estate does indeed influence supply and demand, and this is particularly evident in the housing market when rent control laws are applied. These laws, while intended to help renters by capping prices, can lead to shortages where demand exceeds supply.
Step-by-step explanation:
A limited amount of available real estate influences supply and demand is a true statement. In any market, when the quantity of a product, such as housing units, is limited, it affects both the supply and the demand curves. Regarding rent control laws, these are intended to keep rental prices affordable.
However, setting price ceilings can lead to unintended consequences such as housing shortages, where the demand for rental units exceeds the supply.
For example, a city government enacts a rent control law to maintain the price of an apartment at $500, the original equilibrium price. Despite the law, if demand increases, we encounter a situation where at the controlled price, the quantity of apartments supplied does not increase due to the cap.
This results in a greater quantity demanded than supplied, creating a shortage. Renters may find fewer apartments available under rent control than what the market would provide at a higher, unregulated price.
Real-estate advertisements may not disclose every detail, such as a neighboring landfill, as cues like unusually low prices could suggest underlying issues. Visiting the property can confirm suspicions raised by price signals. Such nuances highlight the complex relationship between regulations, market forces, and real estate availability.