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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Domitila

1 months ago

I don't know about you, but I'd rather be a landlord than a renter in this scenario. Talk about a captive market!

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Gerald

2 days ago

B) The supply curve for rental space to rise.

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Carey

3 days ago

A) The demand curve for rental space to fall.

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Alva

1 months ago

Ah, the old rent freeze conundrum. I'm going to have to go with C on this one. Grab your popcorn and watch the lines for rental space grow!

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Gilbert

1 months ago

This is a tricky one, but I'm going with B. The rent freeze will reduce the incentive for landlords to supply rental space, causing the supply curve to rise.

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Bettye

3 days ago

I think you're right, B makes sense. Landlords won't want to supply as much rental space if they can't increase the rent.

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Wilson

2 months 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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Nicholle

29 days ago

That makes sense. If there's a rent freeze, landlords may not want to rent out their properties, leading to an excess supply.

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Nicholle

1 months ago

I think D is correct. The rent freeze will definitely limit the supply of rental space.

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Ozell

2 months ago

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

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Tasia

2 months 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

3 months ago

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

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Ozell

3 months ago

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

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