The highest amount a landlord can charge for rent is an example of which of the following?

• A. A black market
• B. A price ceiling
• C. A price floor
• D. Market equilibrium

Answer: (B)

Verified step by step guidance

1. Understand the concept of a price ceiling: it is a legally imposed maximum price that can be charged for a good or service, set below the market equilibrium price to make the good more affordable.
2. Recognize that the highest amount a landlord can charge for rent, when legally restricted, is an example of a price ceiling because it limits how high the rent can go.
3. Differentiate a price ceiling from a price floor, which is a minimum price set above equilibrium, and from market equilibrium, which is the price where supply equals demand without restrictions.
4. Identify that a black market arises when goods are sold illegally, often because the price ceiling creates shortages, but the price ceiling itself is the legal restriction, not the black market.
5. Conclude that the correct classification for the highest legal rent a landlord can charge is a price ceiling.