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A city ordinance that freezes rent prices may cause:
Suggested Answer: C
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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.
29 comments · newest first
DY
Dyan
10 months ago
Supply might drop if landlords can't raise rents.
LE
Lezlie
11 months ago
Wait, how can freezing rent prices cause more demand? Sounds off.
RH
Rhea
11 months ago
Actually, I think D could happen too.
RE
Renay
11 months ago
Totally agree, C makes the most sense here.
YA
Yan
11 months ago
Rent freezes usually lead to higher demand.
MI
Mirta
12 months ago
I'm not confident, but I think a rent freeze could lead to a situation where supply doesn't meet demand, which points to C as well.
BO
Bobbye
12 months ago
I feel like I saw a similar question where a price ceiling caused excess demand. So, C seems likely, but I could be wrong.
VE
Verda
12 months ago
I remember discussing how price controls can create shortages, which sounds like option C again.
JO
Jolene
1 year ago
I think a rent freeze might lead to more demand, so maybe option C is correct? But I'm not entirely sure.
LI
Lino
1 year ago
This is a tricky one. I'm not totally confident, but I think the key is understanding how rent control affects the equilibrium in the rental market. I'll need to carefully analyze each answer choice and see which one best describes the likely outcome.
ON
Ona
1 year ago
Okay, I've got this. Rent control reduces the incentive for landlords to supply rental units, so the supply curve shifts to the left. Meanwhile, the demand for rental units increases as more people want to take advantage of the lower prices. That means the quantity demanded will exceed the quantity supplied.
PA
Paz
1 year ago
Hmm, I'm a little unsure about this one. I know rent control can cause some distortions in the market, but I'm not totally clear on the specifics. I'll have to review my notes and try to reason through the different options.
RA
Raymon
1 year ago
This seems like a straightforward question about the effects of rent control. I'll need to think through how rent control impacts the supply and demand for rental space.
DO
Domitila
1 year 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!
TA
Tatum
1 year ago
C) The quantity demanded of rental space exceeds the quantity supplied.
GE
Gerald
1 year ago
B) The supply curve for rental space to rise.
CA
Carey
1 year ago
A) The demand curve for rental space to fall.
AL
Alva
1 year 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!
GI
Gilbert
1 year 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.
ME
Merlyn
1 year ago
I see your point, but I still think B is the best answer. The rent freeze will definitely impact the supply curve.
AN
Andree
1 year ago
But wouldn't that also mean that the quantity demanded of rental space exceeds the quantity supplied? So maybe it's C?
BE
Bettye
1 year 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.
WI
Wilson
1 year 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.
NI
Nicholle
1 year ago
That makes sense. If there's a rent freeze, landlords may not want to rent out their properties, leading to an excess supply.
NI
Nicholle
1 year ago
I think D is correct. The rent freeze will definitely limit the supply of rental space.
OZ
Ozell
1 year ago
That's true, it could create a shortage of rental space.
TA
Tasia
1 year 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.
MA
Margarett
2 years ago
But wouldn't it also lead to the quantity demanded exceeding the quantity supplied?
OZ
Ozell
2 years ago
I think a rent freeze may cause the demand curve to fall.