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In essence, all rent-control policies involve specifying a maximum ren

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In essence, all rent-control policies involve specifying a maximum ren  [#permalink]

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New post 19 Jan 2020, 09:13
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In essence, all rent-control policies involve specifying a maximum rent that a landlord may charge for a dwelling. The rationale for controlling rents is to protect tenants in situations where limited supply will cause rents to rise sharply in the face of increased demand. However, although rent control may help some tenants in the short run, it affects the rental-housing market adversely in the long run because landlords become reluctant to maintain the quality of their existing properties and even more reluctant to have additional rental-housing units built.

Which one of the following, if true, best explains the landlords’ reluctance described above?


(A) Tenants prefer low-quality accommodations with rent control to high-quality accommodations without it.

(B) Rent control makes it very difficult for landlords to achieve reasonable returns on any investments in maintenance or in new construction.

(C) Rent control is a common practice even though it does nothing to alleviate shortages in rental housing.

(D) Rent control is generally introduced for political reasons and it takes political action to have it lifted again.

(E) Tenants prefer rent control to the alternative of receiving direct government subsidies toward rents they cannot afford.

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Re: In essence, all rent-control policies involve specifying a maximum ren  [#permalink]

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New post 19 Jan 2020, 15:21
Bunuel wrote:
In essence, all rent-control policies involve specifying a maximum rent that a landlord may charge for a dwelling. The rationale for controlling rents is to protect tenants in situations where limited supply will cause rents to rise sharply in the face of increased demand. However, although rent control may help some tenants in the short run, it affects the rental-housing market adversely in the long run because landlords become reluctant to maintain the quality of their existing properties and even more reluctant to have additional rental-housing units built.

Which one of the following, if true, best explains the landlords’ reluctance described above?


(A) Tenants prefer low-quality accommodations with rent control to high-quality accommodations without it.

(B) Rent control makes it very difficult for landlords to achieve reasonable returns on any investments in maintenance or in new construction.

(C) Rent control is a common practice even though it does nothing to alleviate shortages in rental housing.

(D) Rent control is generally introduced for political reasons and it takes political action to have it lifted again.

(E) Tenants prefer rent control to the alternative of receiving direct government subsidies toward rents they cannot afford.



landlords become reluctant to maintain the quality of their existing properties and even more reluctant to have additional rental-housing units built.
we should find a reason why landlords are losing.


(A) Tenants prefer low-quality accommodations with rent control to high-quality accommodations without it.No impact on landlord. also if tenant gets both at same cost , it does not affect landlord

(B) Rent control makes it very difficult for landlords to achieve reasonable returns on any investments in maintenance or in new construction.This is good reason why landlords are reluctant

(C) Rent control is a common practice even though it does nothing to alleviate shortages in rental housing.No impact

(D) Rent control is generally introduced for political reasons and it takes political action to have it lifted again.Again it does not drive landlords

(E) Tenants prefer rent control to the alternative of receiving direct government subsidies toward rents they cannot afford. No impact
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Re: In essence, all rent-control policies involve specifying a maximum ren   [#permalink] 19 Jan 2020, 15:21
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