Rent control applies to about two-thirds of the private rental housing in New York City. Economic theory suggests that a below-equilibrium price established by rent control:
a. creates a surplus of rental housing.
b. promotes a rapid increase in the future supply of housing.
c. results in poor service and quality deterioration of many rental units.
d. leads to a reduction in housing discrimination against minorities.
Question 2
Many student government candidates at colleges and universities propose rent controls on local rental housing as a way to help students afford rental housing. Economic theory suggests that this policy would harm students as a whole despite the fact that some students who are able to find housing at the reduced price would benefit. Which of the following are some of the offsetting secondary effects of the rent controls that would work to the disadvantage of students?
a. There would be a shortage of rental housing, making it very difficult for students to find places to rent and causing increased discrimination in the rental housing market.
b. There would be a reduction in the quality of rental housing.
c. There would be a reduction in the future supply of rental housing.
d. All of these would be secondary effects of the rent controls.
