Which of the following is the most correct statement about the impact of rent controls?
A) The short-run supply curve for apartments is inelastic, so rent controls create larger shortages in the short run than in the long run.
B) The short-run supply curve for apartments is inelastic, so rent controls create smaller shortages in the short run than in the long run.
C) The long-run supply curve for apartments is inelastic, so rent controls create larger shortages in the long run than in the short run.
D) The long-run supply curve for apartments is inelastic, so rent controls create smaller shortages in the long run than in the short run.

Question

Quizplus · Accepted Answer

In the short run, suppliers cannot easily increase the quantity of apartments they provide. Therefore, if rent controls are implemented, the demand will remain the same but the quantity supplied will decrease. This results in a shortage of apartments. In the long run, suppliers can adjust to the new market conditions by building more apartments or converting other spaces into apartments. Thus, the long-run supply curve is more elastic than the short-run supply curve, reducing the shortage created by rent controls.

Which of the Following Is the Most Correct Statement About