Other

Question

The city of New Raven has decided to impose rent controls on office buildings in the city. As a result of this, the new rent

O A. celing is higher than the equilibrium rent and there will be a surplus of rental offices.

• B. floor is lower than the equilibrium rent and there is no shortage of rental offices.

O C. celing is lower than the equilibrium rent and there will be a shortage of rental offices.

O D. floor is equal to the equilibrium rent and there will be a surplus of rental offices.

Answer

C. celing is lower than the equilibrium rent and there will be a shortage of rental offices.

Download to view full explanation

Rent controls are a form of price control, which is a government regulation that sets a maximum price for a good or service. In this case, the city of New Raven has imposed rent controls on office buildings, meaning that the rent ceiling is lower than the equilibrium rent. This will lead to a shortage of rental offices, as the demand for rental offices will be higher than the supply.