Question

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1. Most economists are against rent control (Price Ceiling) because it

1. discourages tenants from searching for apartments.
2. encourages landlords to build too many apartments.
3. discourages the building of new apartments.
4. leads to surpluses.

Answer 1

Answer: Discourage tenants from searching for apartments.

Rent control is supposed to protect poor, deserving tenants from the depredations of greedy landlords.

Research on rent control shows that many of the beneficiaries are of the lower income group and that by putting a bar on their rents would encourage them to be in their apartments for a good long time. Economists in general are against the cap on rent control since it goes against the law of supply and demand. When the demand for a product consistently exceeds the supply, prices will rise until the quantity demanded is equal to the amount that suppliers have available.