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

Question

Quizplus · Accepted Answer

In the short run, landlords are limited in their ability to increase the supply of rental housing because it takes time to make investment decisions and construct new housing. However, in the long run, landlords have more flexibility to adjust the supply of rental housing. They may choose to invest in new construction or convert existing properties for rental use based on changes in demand and market conditions. Therefore, the long-run elasticity of supply of rental housing is greater than the short-run elasticity of supply.

The Long- Run Elasticity of Supply of Rental Housing Is