Rent control is the legislation of below-market rent increases.

Question

Rent control is the legislation of below-market rent increases. City managers wishing to ensure the affordability of housing impose upper limits on the increases landlords can impose on tenants. In a year in which the free market might demand a 10% rise in rent levels, for example, rent controls might permit no more than a 5% increase.

When rent inflation is higher than rent control limits, the policy does lead to lower housing costs for tenants. Since periodic increases are not as high as they otherwise would be, the resulting rents are lower. The lower rent persists for as long as the tenant remains in the home; very long-term tenants can end up paying rents that are a tiny fraction of the market value of a rental.

The effects of rent control are not universally beneficial however. Since revenues to landlords are limited by rent control, landlords are motivated to offer fewer properties for rent, and to cut back on maintenance costs for those properties they do offer. As a result, rental properties in rent-controlled communities become scarcer and more difficult to obtain and, generally, housing quality deteriorates.

The shortcomings of rent control policies often result in changes to those policies after they are instituted. Rental markets are devastated, yet political pressure from the policies' beneficiaries prevents their abolition. It often becomes necessary to exempt some properties from rent control, so that investors will have incentives to develop new rentals.    1 
 1. What is the purpose of this passage?

A. To endorse the use of rent control as a means of ensuring affordable housing
B. To explain how rent controls benefit the rental markets in cities in which they are employed
C. To show that rent control policies are detrimental
D. To explain the advantages and disadvantages of rent control policies
E. To compare rent control policies with other public policies

2 
 2. The passage states that all of the following are drawbacks of rent control EXCEPT

A. Decreased availability of rental properties
B. Poorer condition of rental properties
C. Fewer people moving into rent-controlled cities from without
D. Difficulty in finding properties to rent
E. Limited revenues for landlords

3 
 3. The author would most likely agree with which of the following?

A. Rent controls should not be employed in any city.
B. In years in which market rents don't increase much, rent controls could have no effect whatsoever on actual rent increases.
C. The benefits of rent control outweigh its costs.
D. Cities in which the rental markets are combinations of rent-controlled and free-market properties are less desirable to live in than cities with uniform rental markets.
E. Some landlords favor rent control policies.

kantapong · Answer

Passage Summary
P1: Rent control regulation
P2: when inflation inc, rent dec
P3: drawback of reg
P4: necessary to change, but face opposition

Q1 Purpose
C. To show that rent control policies are detrimental
D. To explain the advantages and disadvantages of rent control policies
(Does the author say that rent control policies should not be used, or ambivalent? Yes, the author clearly says that regulation needs to be modified - ANS C)

Q2 Drawbacks EXCEPT
C. Fewer people moving into rent-controlled cities from without
E. Limited revenues for landlords
(Limited revenues is stated earlier while fewer people moving ... is not stated - C)

Q3 Agree
A. Rent controls should not be employed in any city. (YES)
B. In years in which market rents don't increase much, rent controls could have no effect whatsoever on actual rent increases. (opposite -> DROP)
C. The benefits of rent control outweigh its costs. (opposite -> DROP)
D. Cities in which the rental markets are combinations of rent-controlled and free-market properties are less desirable to live in than cities with uniform rental markets. (irrelevant -> DROP)
E. Some landlords favor rent control policies. (opposite -> DROP)
Ans: A

Sajjad1994 · Answer

Official Explanation

3. The author would most likely agree with which of the following?

Analyze the Question Stem:

The phrase  "would most likely agree"  means that this is an Inference question asking for the author's opinion.

Research the Relevant Text:

Since this question does not specify a particular topic in the passage, the correct answer could be based on any part of it and there's no way to research now. Instead, evaluate the choices and research them as needed.

Make a Prediction:

It is difficult to make a prediction on open-ended Inference questions. The best plan is to move straight to the choices and evaluate them in turn, keeping the Scope and Purpose in mind.

Evaluate the Answer Choices:

(A)  is incorrect because the author never expresses any opinion about whether rent control should be used. She only discusses its effects (both positive and negative) in the cases where it is used.

Since the author states in the first paragraph that rent controls represent an upper limit on rent increases, controls would not restrict a landlord from charging the market-demanded increase in a year in which that increase is less than the limit imposed by rent control. For example, if the rent control law limits increase to 5% per year, and if the market demands only a 2% increase in a particular year, a landlord could charge the entire 2% without running afoul of the rent control policy. Thus, in some years rent controls might not affect rent increases at all, making  (B)  is correct.

(C)  is incorrect because the author does not provide any means of comparing the costs of rent control to its benefits.

(D)  is an irrelevant comparison; the author does not express any opinion on the desirability of living in any city, rent-controlled or otherwise.

(E)  may be true, but there's no way to infer this statement from the contents of the passage.

Answer: B

TAKEAWAY:  Keep in mind on Inference questions that you must be able to cite a specific part of the passage that supports the answer you choose.

Sajjad1994 · Answer

Official Explanation

2. The passage states that all of the following are drawbacks of rent control EXCEPT

Analyze the Question Stem:

Notice the word  “EXCEPT,”  which often shows up in all-caps in GMAT question stems. This Detail question asks for the choice that is NOT given in the passage as one of rent control’s disadvantages.

Research the Relevant Text:

As the passage map shows, the third paragraph is the place to look for information on the drawbacks of rent control. The drawbacks are limited revenues for landlords, lower availability of rentals, and a decreased incentive to maintain the properties.

Make a Prediction:

Since this is an “EXCEPT” question, the four incorrect choices will be examples of rent control’s disadvantages that the author directly mentions in the passage. Look to eliminate the incorrect choices that mention one of the disadvantages found while researching.

Evaluate the Answer Choices:

(A)  is incorrect because the author states in paragraph three that rental properties become scarcer in rent-controlled communities. Also in the third paragraph, the author claims that the quality of this rental housing deteriorates, so eliminate  (B) .

(C)  is correct because it is not mentioned in the passage as a drawback to rent control. The author never discusses the effect of rent control on immigration into a city.

(D)  can be eliminated, since the author explains (in the third paragraph’s last sentence) that properties become more difficult to obtain under rent control. The second sentence of paragraph three asserts that rent control limits landlords’ revenues, rendering  (E)  incorrect.

Answer: C

TAKEAWAY:  In an EXCEPT question, predict the incorrect choices, not the correct ones.

Sajjad1994 · Answer

Explanation

1. What is the purpose of this passage?

Explanation

Analyze the Question Stem:

The word  "purpose”  in the question stem signals that this is a Global question asking about the passage’s overall purpose.

Research the Relevant Text:

For Global questions, there's no need to go back to the passage itself. The relevant information is already summarized in the passage map.

Make a Prediction:

The correct answer will be the one that most closely resembles the statement of Purpose from the passage map:  “To explain the advantages and disadvantages of rent control.”

Evaluate the Answer Choices:

(D)  is correct, since it matches the prediction that the passage was written to explain the effects, good and bad, of rent control policies.

(A)  does not work because the author does not endorse rent controls. The tone of the passage is neutral.

(B)  is incorrect because only the second paragraph explains the benefits of rent controls. This is a detail, not the author's primary purpose.

(C)  is likewise too narrowly focused – much of the passage does explain the detriments of rent control policies, but not the entire passage.

(E)  is unsupported; the author doesn’t mention other public policies.

TAKEAWAY:  Remember when making your passage map that it’s always a good idea to express the author’s Purpose in active verb form, since the answer choices on GMAT Purpose questions will almost always contain such verbs.

Answer: D

Rent control is the legislation of below-market rent increases.

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GMAT Reading Comprehension (RC) Questions

Rent control is the legislation of below-market rent increases.

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