The Following Questions Refer to the graph below.
-An increase in rent that leads to increased profitability of producing rental housing will lead to which of the following shifts in the long run?

Question

The Following Questions Refer to the graph below. 
-An increase in rent that leads to increased profitability of producing rental housing will lead to which of the following shifts in the long run?

Quizplus · Accepted Answer

An increase in rent that leads to increased profitability of producing rental housing will lead to an increase in the supply of rental housing. This is represented by a shift of the supply curve to the right from SS to SS1. As a result, the equilibrium price will decrease and the equilibrium quantity will increase, leading to a new equilibrium point at E1.

The Following Questions Refer to the Graph Below