Which of the following statements illustrates a rent ceiling?

• A. Landlords are required to charge a minimum price for rental units.
• B. The government imposes a tax on rental income.
• C. Rent prices are determined solely by supply and demand without any government intervention.
• D. The government sets a maximum legal price that landlords can charge for apartments.

Answer: (D)

Verified step by step guidance

1. Understand the concept of a rent ceiling: it is a government-imposed maximum price that landlords can charge for rental units, intended to keep housing affordable.
2. Identify that a rent ceiling limits the price from going above a certain level, which means landlords cannot charge more than this set maximum price.
3. Compare the given statements to this definition: a minimum price requirement is a price floor, not a ceiling; a tax on rental income is a fiscal policy, not a price control; prices determined solely by supply and demand imply no government intervention.
4. Recognize that the statement 'The government sets a maximum legal price that landlords can charge for apartments' directly matches the definition of a rent ceiling.
5. Conclude that the correct illustration of a rent ceiling is the government setting a maximum legal price for rent, as it restricts prices from rising above that level.