Suppose the city of Arcata, California, imposes rent control so that rents cannot exceed $1,000 per month on one-bedroom rental units. Suppose $1,000 had also been the equilibrium rental price in Arcata before a huge new apartment complex was built in the nearby town of McKinleyville, where rents are $800 per month. Which of the following is most likely true? a. There will be a shortage of rental housing in Arcata at the rent control price of $1,000. b. There will be a lasting surplus of rental housing in Arcata after the new apartment complex is built in McKinleyville. c. The equilibrium rental price in Arcata will fall below $1,000; thus, rent control will not affect the rental market in Arcata. d. The equilibrium price of $1,000 per month in Arcata will not change.

BuyFind

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
BuyFind

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

Solutions

Chapter
Section
Chapter 4, Problem 14SQ
Textbook Problem

Suppose the city of Arcata, California, imposes rent control so that rents cannot exceed $1,000 per month on one-bedroom rental units. Suppose $1,000 had also been the equilibrium rental price in Arcata before a huge new apartment complex was built in the nearby town of McKinleyville, where rents are $800 per month. Which of the following is most likely true?

  1. a. There will be a shortage of rental housing in Arcata at the rent control price of $1,000.
  2. b. There will be a lasting surplus of rental housing in Arcata after the new apartment complex is built in McKinleyville.
  3. c. The equilibrium rental price in Arcata will fall below $1,000; thus, rent control will not affect the rental market in Arcata.
  4. d. The equilibrium price of $1,000 per month in Arcata will not change.

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Chapter 4 Solutions

Economics For Today
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