A government introduces a strict cap on the maximum rent that landlords can charge for residential properties in major urban areas. Which of the following best explains why this intervention may result in a government failure?
It incentivises landlords to allocate housing purely based on market price signals, eliminating rental queues.
It resolves asymmetric information by forcing landlords to disclose the true structural quality of their properties.
It can lead to unintended consequences, such as landlords withdrawing properties from the long-term rental market and demanding illicit, off-contract payments.
It reduces the overall administrative and enforcement costs borne by local housing authorities.
9 exam-style questions on Edexcel A A Level Economics 1.4.2 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.