ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Yes, rent control is an example of a price ceiling. A price ceiling is the maximum a seller is allowed to charge for a product or service as mandated by law. Rent control limits the amount a landlord can charge and/or increase the rent on their property.

Detailed explanation-2: -Economists agree rent control doesn’t work; California passes sweeping rent control ordinance anyways. Despite a broad consensus among economists and overwhelming evidence that rent control actually makes housing more expensive, California state government passed a sweeping new rent control ordinance this month.

Detailed explanation-3: -Households of all income types reside in rent-controlled units because there are no means testing to target households based on either income or net worth. As such, while the goal is often to support low income households, middle and higher income households frequently live in these units.

Detailed explanation-4: -Rent control, like all other government-mandated price controls, is a law placing a maximum price, or a “rent ceiling, ” on what landlords may charge tenants. If it is to have any effect, the rent level must be set at a rate below that which would otherwise have prevailed.