The long-run elasticity of supply of rental housing is greater than the short-run elasticity of supply because
A)changes in supply can occur very quickly,especially when rent controls are in place.
B)investment in new rental housing has such a short payback period.
C)changes in supply occur only after investment decisions are made regarding,for example,new construction or conversion of rental housing to other uses.
D)in the long run,landlords have no incentive to alter the supply of rental housing.
E)the demand for rental housing is changing continuously.

Question

Quizplus · Accepted Answer

In the short run, landlords have limited options to increase the supply of rental housing, such as lowering maintenance or management costs. In the long run, however, they can invest in new construction or convert existing properties to rental housing. These investment decisions take time to make and implement, which is why the long-run elasticity of supply is greater than in the short run.

The Long-Run Elasticity of Supply of Rental Housing Is Greater