Rents Are Soaring Across the U.S.

Shanti Singh, legislative director of the non-profit Tenants Together, says that rent prices are soaring. Many people are behind on their rent and under severe financial strain. Some are being evicted. “We need rent control,” says Singh.—theguardian.com

Answer the following questions to check your understanding of the story.

If governments agree with Singh, and set a rent ceiling below the equilibrium rent, what is the outcome?

a) People who are lucky enough to rent housing benefit, but those who can’t are still searching and might have an incentive to trade illegally in the housing market.

b) The would-be renter’s opportunity cost of searching for rental housing falls.

c) Everyone benefits from the rent ceiling.

d) Landlords have an incentive to supply more rental housing because they know that a shortage of rental housing exists.

If Singh is successful in convincing governments to set effective rent ceilings, is the outcome fair?

The outcome _______________.

a) is fair because a rent ceiling is a better way to allocate housing other than market price

b) isn’t fair because some would-be renters are willing to trade illegally to obtain rented housing

c) isn’t fair because the rent ceiling blocks voluntary exchange, and the poorest people aren’t necessarily the ones who receive housing

d) is fair because people will experience less financial strain and the number of evictions will decrease

Rents Are Soaring Across the U.S.

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