FIGURE 5-4
-Refer to Figure 5-4.Suppose the government imposes a rent-controlled price of $600 per month on apartments in this city.In the long run we can expect the shortage of apartments to be ________ units.

Question

Quizplus · Accepted Answer

At a rent-controlled price of $600 per month, the quantity of apartments supplied will decrease to 200 units, while the quantity demanded will increase to 1,000 units. This results in a shortage of 800 units (1,000 – 200 = 800). This shortage is likely to persist in the long run as suppliers of rental units will not want to build new units or maintain existing units if they cannot charge market prices that cover their costs.

FIGURE 5-4 -Refer to Figure 5-4.Suppose the Government Imposes a Rent-Controlled Price