00:01
Is asking which of the following statements is true about rent controls.
00:06
Okay, so a, it makes more apartments available for people.
00:11
B, it can often cause a surplus of apartments.
00:15
C, it leads to a more equitable distribution of apartments.
00:19
And d, it encourages increased investment in apartments.
00:22
Oh, and e, we have five.
00:25
It leads to a shortage of apartments.
00:28
All right, so here they they are here answer choices okay so let's see which ones make the least amount of sense so let's see d says that encourages increased investment that doesn't make sense right because if you're an investor and you know that you can't charge more than a certain amount because the government put a limit on rent you're not going to be as encouraged to invest in apartments because you don't make as much money out of it so that's going to be a no what i'm going to do is i'm going to draw a supply and demand curve.
01:01
So this is the price.
01:04
This is the quantity demanded.
01:07
So this is the supply and apartments.
01:11
And we're saying that this isn't changing, right? because we have a decrease in investments.
01:17
So we're not going to have an increase in supply.
01:19
And this is going to be the whoops demand curve technically right either way apartments are going to be demanded because people need a place to live but let's just take a look at this actually let's just take a look at supply right so if the price is capped here so the price is here it can't be higher so so let's say the price would have been here, but instead this is the ceiling that they put so you can charge more than this for an apartment.
01:55
So if this is where you are, but now let's draw the demand curve.
02:02
The demand is up here, right? you're not going to have as many houses as you should, right? it causes a housing shortage is what it tends to do...
