In recent years, renting a 2-bedroom apartment in San Diego has become more expensive as rents...

In recent years, renting a 2-bedroom apartment in San Diego has become more expensive as rents have been increasing at a rate of 5 percent per year. The City of San Diego is considering a policy that would limit increases on rent to be no more than 2 percent per year. It is expected that this policy will cause

1. Apartment prices to rise

2. Apartment prices to fall 3.

Apartment prices to neither rise nor fall (i.e. remain stable)

Solutions

Expert Solution

"A"

Apartment price will rise as the supply of the apartments in the market will fall, and that will shift the supply curve to the left new equilibrium will be at a higher price and lower quantity of apartments available.

Rahul Sunny answered 2 years ago

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