Suppose the State government decides to implement rent controls. The housing shortage in the short run is likely to be less severe than the housing shortage in the long run.

Question

Quizplus · Accepted Answer

Rent controls may discourage developers from building new housing units since they would not be able to make a profit due to the lowered rent prices. Therefore, in the long run, there may be a greater shortage of housing units. However, in the short run, existing renters may benefit from the lower rental prices.

Suppose the State Government Decides to Implement Rent Controls