Principles of Economics: Microeconomics - Price Ceilings: Rent Controls

How rent controls (price ceilings) cause housing shortages, reduced quality, misallocation, and discrimination, using real-world examples and demand–supply graphs. Rent controls are a type of price ceiling. We’ll use our diagram to show how rent controls create shortages by reducing the supply of apartments available on the market. Rent controls also result in reduced product quality, since they reduce the returns to landlords from renting apartments. Landlords respond by cutting costs or performing less maintenance, leading to lower quality. There are search costs associated with rent controls, and they also lead to a misallocation of resources since apartments are not allocated to renters who value them the most. Try our price ceilings interactive practice: https://mru.io/u7y Microeconomics Course: https://mru.io/zur Next video: https://mru.io/a88 Help us caption & translate this video! http://amara.org/v/GLJ9/ 00:00 Introduction 00:23 Rent Controls Are Price Ceilings 00:39 Rent Controls Create Shortages 02:42 Effect of Debating Rent Controls 04:26 Reductions in Product Quality 05:49 Wasteful Lines and Search Costs 07:41 Misallocation of Resources