An effective rent control will
A) lead to a surplus of housing units.
B) keep rents below the competitive market level.
C) keep rents above the competitive market level.
D) be set at the price where quantity supplied equals quantity demanded.
Answer: B
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Suppose that choice sets are convex. State assumptions about tastes that are necessary and sufficient to guarantee that the first order conditions are necessary and sufficient for identifying a true optimum.
What will be an ideal response?
The figure above shows the costs for a grower in the perfectly competitive turnip market. If the price is $1,000 for a ton of turnips, the firm is
A) making an economic profit. B) making zero economic profit. C) incurring an economic loss. D) More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss.
An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day
The Australian factory can produce either 100 engines or 75 transmission per day. A) The Vietnamese factory has an absolute advantage producing both engines and transmissions. B) The Australian factory has an absolute advantage in the production of transmissions. C) The Vietnamese factory has a comparative advantage in the production of transmissions. D) Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies.
Appleville is a village that specializes in all forms of apple products. Suppose that each winter, when no apples are being produced, the aggregate output falls below the long-run output level. What type of fiscal policy might be most effective to correct this problem?
A) Reducing taxes in order to decrease aggregate demand. B) Increasing government spending in order to increase aggregate demand. C) Decreasing government spending in order to increase aggregate demand. D) Increasing taxes in order to increase aggregate demand.