AICPA Exam CPA-Business Topic 1 Question 107 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 107
Topic #: 1

[All CPA-Business Questions]

A city ordinance that freezes rent prices may cause:

AThe demand curve for rental space to fall.

BThe supply curve for rental space to rise.

CThe quantity demanded of rental space exceeds the quantity supplied.

DThe quantity supplied of rental space exceeds the quantity demanded.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. Return on investment equals net income divided by average invested capital:

Choices 'a', 'b', and 'd' are incorrect, per the above calculation.

by Emerson at Feb 07, 2025, 08:11 PM

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Wilson

12 days ago

D seems more likely to me. The rent freeze will limit the supply of rental space, causing the quantity supplied to exceed the quantity demanded.

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Ozell

12 days ago

That's true, it could create a shortage of rental space.

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Tasia

13 days ago

I think the correct answer is C. A rent freeze will cause the quantity demanded to exceed the quantity supplied, leading to a shortage of rental space.

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Margarett

23 days ago

But wouldn't it also lead to the quantity demanded exceeding the quantity supplied?

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Ozell

24 days ago

I think a rent freeze may cause the demand curve to fall.

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