Under a policy of rent control, the short-run shortage ______ the long-run shortage.
A) is smaller than
B) is larger than
C) is equal to
D) overshadows

Question

Quizplus · Accepted Answer

In the short-run, rent control leads to a decrease in the quantity of rented units supplied, resulting in a shortage. However, in the long-run, landlords will not find it profitable to supply rental housing, leading to a decrease in the quantity of rented units supplied and an increase in the quantity of rental housing demanded, resulting in a larger shortage. Therefore, the short-run shortage is smaller than the long-run shortage.

Under a Policy of Rent Control, the Short-Run Shortage ______