Question

rough draft research paper: rent control

Answer 1

Rent Control is a type of price ceiling which is imposed by government such that landlords cannot charge amount they wish from tenants. There must be some barriers on the highest amount of money they can charge no matter how high the demand is. It is effective when imposed below equilibrium price (Pe). At price ceiling, there is high demand than supply which will result in shortage of goods. Imposition of rent control will result in black market of rental housing because there is shortage of houses on the government imposed price ceiling. People would be reluctant to give more money than price ceiling to rent a house.