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JAMB Economics 2013 Question 20

Question 20

Price Determination

In Nigeria, government can reduce the cost of accommodation by fixing rent

  1. A.at the prevailing rate.
  2. B.at the equilibrium price.
  3. C.above the equilibrium price.
  4. D.below the equilibrium price.
Show the answer and explanation

Answer: D (below the equilibrium price.)

Explanation

A rent control lowers the cost of housing only if the maximum rent is set below the market (equilibrium) rent.