1.Limiting the price of rentals to an artificially low level makes the quantity

Question

1.Limiting the price of rentals to an artificially low level makes the quantity supplied less than the quantity demanded. What is the economic term for this? How is this related to the homelessness on page 71?

2.Please describe the effect that price controls on housing will have on consumer surplus. How could lower prices possibly lead to less consumer surplus?

3.How can affordable housing initiatives possibly lead to discrimination (race, age, etc.) in the rental market? How does a market without price restrictions eliminate this problem?

Explanation / Answer

1. Economic term for this is Rent Control which is an example of Price Ceiling.  Because rents are established at less than their equilibrium levels, the quantity demanded necessarily exceed the amount supplied, and rent control leads to shortage of homes.

2. If quantity demanded exceeds quantity supplied, so that there is a shortage of a good as in the case of a binding price ceiling, sellers can ration the good according to their personal biases, or make buyers wait in line.a shortage of dwelling spaces causing possible consumer surplus.

3.

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