Figure: Short and Long Run Shortages Use the figure. At a rent-controlled price of $800, the short-run shortage of apartments is ________ and the long-run shortage is ________.

Question

Figure: Short and Long Run Shortages  Use the figure. At a rent-controlled price of $800, the short-run shortage of apartments is ________ and the long-run shortage is ________.

Quizplus · Accepted Answer

At a rent-controlled price of $800, the quantity demanded of apartments is 16,000 and the quantity supplied is 4,000, resulting in a short-run shortage of 12,000 apartments (16,000 - 4,000 = 12,000). In the long run, some suppliers will leave the market due to low profits, causing the quantity supplied to decrease to 8,000 apartments. At a rent-controlled price of $800, the quantity demanded of apartments is still 16,000, resulting in a long-run shortage of 12,000 apartments (16,000 - 8,000 = 8,000). Therefore, option B is correct.

Figure: Short and Long Run Shortages Use the Figure