The issue in the stimulus deals with rent control, a policy designed to help protect tenants from steep increases in rents. The stimulus concludes that this practice can be detrimental, as it can create incentives for landlords to refrain from maintaining the quality of their existing properties and constructing new rental sites.
Answer choice A does nothing to explain the landlords' reluctance described in the stimulus. For one, A discusses non-rent-controlled housing, and this is not discussed in the stimulus, so it's irrelevant. It doesn't matter what the tenants prefer, as the fact of the matter is that the tenants discussed in the stimulus live in rent-controlled buildings, so the landlords presumably don't even have the option of providing more luxurious, non-rent-controlled units on these particular sites.
Answer choice B states that rent control makes it very difficult for landlords to achieve reasonable returns on any investments in maintenance or in new construction. This answer does a great job in explaining the landlords' reluctance described in the stimulus. Although rent control is intended to aid the renters, the rent controls can make it more challenging for landlords to earn returns on their investments in building or maintaining properties. This would explain their reluctance. If their profits are capped from rent control, why waste money on maintaining or building new units?
Does this make sense? Let us know if you have more questions!
