ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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People can find apartments but cannot afford to rent them.
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Houses are broken up into apartments to meet the demand.
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More people want to rent apartments than are available to rent.
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Construction jobs increase with the building of new apartment buildings.
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Detailed explanation-1: -What is the economic effect of price ceilings? The economic effect of a price ceiling will be a shortage, as the lower price will decrease supply and increase demand.
Detailed explanation-2: -Rent control is an example of a price ceiling, a maximum allowable price. With a price ceiling, the government forbids a price above the maximum. A price ceiling that is set below the equilibrium price creates a shortage that will persist.
Detailed explanation-3: -The following are the effects of price ceiling: Short term reduction in prices. Shortage of goods or services in the long term. Levying extra charges by sellers.
Detailed explanation-4: -It prevents extraordinary increase in the price of goods and services. It lowers the prices for the consumers. It stops producers from charging exorbitant prices on their products. It increases the efficiency of the producers by leading them to reduce production costs in order to save money.