In Nigeria, the government can reduce the cost of accommodation by fixing the rent
- at the prevailing rate
- at the equilibrium price
- above the equilibrium price
-
below the equilibrium price
The correct answer is: D
Explanation
The government can reduce the cost of accommodation by fixing the rent at a maximum price. Maximum prices occur when a government sets a legal limit on the price of a good or service – with the aim of reducing prices below the market equilibrium price.
Governments try to control the rate charged for rent by keeping the cost of renting below a certain level. However,
setting the price below equilibrium maximum will cause a shortage – demand will be greater than supply.