When cities prevent landlords from charging market rents, which of the following are common long-run outcomes?

Effects of rent control

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price.

When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply.

The future supply of rental housing units increases.
Efficient use of housing space results.
Black markets develop.
Landlords earn lower profits from renting housing units, but the rent charged has no effect on either the quantity or quality of rental units.

Expert Solution

Under rent control landlords gives less maintenance and are not likely to upgrade their units as they cannot pass on such costs to tenants with the higher rents. Due to a reduction in the maintenance, quality falls and deteriorates housing units more quickly

Also as the profitability of renting and owning department units falls with rent control, landlords construct lesser new units and also even prefer to convert existing apartments to more profitable uses. It reduces the number of units available to renters in the future

A shortage of housing units due to the excess demand may cause renters to make under-the-table payments for securing an apartment. It may result to the black market development for rental units

-- Efficient use of housing space results

-- Black markets develop

Rahul Sunny answered 2 years ago

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