Answer:
Options A and B is the correct answer
Explanation:
Rent Control Acts create both long-term and short-term problems are created by rent control acts.
The Rent Control Act in the short-run results in a shortage of rental units. However, in the long-run, the impact of these Acts is more serious.
With no change in rent, the incentive for owners to sustain the quality of rental units and thus charge higher rent gets banished.
As to this, they do not maintain their units properly, and the result of this is a decline in the quality of rental units in the long-run.
Secondly, scarcity of rental units gives rise to various non-price rationing methods that owners use to allocate their rental units.
Thus, options A and B is the correct answer.
The common long-run outcomes that result when cities prevent landlords from charging market or commercial rents are A. The quality of rental housing units falls, and B. Non-price methods of rationing emerge.
Rent Controls discourage landlords from buying, building, and maintaining houses that are of the highest quality. Market forces may indeed play against the poor, especially when monopolies develop. It is the responsibility of the government to check monopolistic tendencies in the market. Using Rent Controls to achieve this is counter-productive.
Landlords rent out housing units to make profits. This profit motive is good in a market-driven economy. Fraudulent profiteering should be discouraged. When cities control rents, it does not increase the supply of rental units nor encourage black markets to develop.
Thus, the long-run outcomes when cities prevent landlords from charging market rents through Rent Controls are a reduction in quality and the use of non-price methods for rationing rental units.
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