Question

The enactment of rent control will likely lead to all but which of the following? disequilibrium...

The enactment of rent control will likely lead to all but which of the following?
disequilibrium in the marketplace
shortage
inefficient allocation of resource
black markets
an increase in total economic surplus
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Answer #1

Equilibrium in the market occurs at point C. At price ceiling, there is disequilibrium in the market because demand > supply.

Price ceiling will result in shortage of goods.

Price ceiling cause inefficient allocation of resources due to deadweight loss of area of triangle CDE.

Price ceiling raise black market price to F due to shortage of goods.

Price ceiling does not increase total economic surplus because of deadweight loss. Thus, option E is correct.

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