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AICPA Exam CPA-Business Topic 1 Question 107 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 107
Topic #: 1
[All CPA-Business Questions]

A city ordinance that freezes rent prices may cause:

Show Suggested Answer Hide Answer
Suggested Answer: C

Choice 'c' is correct. Return on investment equals net income divided by average invested capital:

Choices 'a', 'b', and 'd' are incorrect, per the above calculation.


by Emerson at Feb 07, 2025, 08:11 PM

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Domitila
2 months ago
I don't know about you, but I'd rather be a landlord than a renter in this scenario. Talk about a captive market!
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Tatum
9 days ago
C) The quantity demanded of rental space exceeds the quantity supplied.
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Gerald
1 months ago
B) The supply curve for rental space to rise.
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Carey
1 months ago
A) The demand curve for rental space to fall.
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Alva
2 months ago
Ah, the old rent freeze conundrum. I'm going to have to go with C on this one. Grab your popcorn and watch the lines for rental space grow!
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Gilbert
2 months ago
This is a tricky one, but I'm going with B. The rent freeze will reduce the incentive for landlords to supply rental space, causing the supply curve to rise.
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Merlyn
20 days ago
I see your point, but I still think B is the best answer. The rent freeze will definitely impact the supply curve.
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Andree
22 days ago
But wouldn't that also mean that the quantity demanded of rental space exceeds the quantity supplied? So maybe it's C?
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Bettye
1 months ago
I think you're right, B makes sense. Landlords won't want to supply as much rental space if they can't increase the rent.
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Wilson
3 months ago
D seems more likely to me. The rent freeze will limit the supply of rental space, causing the quantity supplied to exceed the quantity demanded.
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Nicholle
2 months ago
That makes sense. If there's a rent freeze, landlords may not want to rent out their properties, leading to an excess supply.
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Nicholle
2 months ago
I think D is correct. The rent freeze will definitely limit the supply of rental space.
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Ozell
3 months ago
That's true, it could create a shortage of rental space.
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Tasia
3 months ago
I think the correct answer is C. A rent freeze will cause the quantity demanded to exceed the quantity supplied, leading to a shortage of rental space.
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Margarett
4 months ago
But wouldn't it also lead to the quantity demanded exceeding the quantity supplied?
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Ozell
4 months ago
I think a rent freeze may cause the demand curve to fall.
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