Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Question

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The initial shortage caused by rent control is not necessarily large due to inelastic supply and demand in the short run; rather, it's because supply and demand are relatively inelastic, adjustments to new price ceilings (rent controls) take time, making the immediate shortage typically smaller. Over time, as adjustments occur, the shortage can become larger.

Because the Supply and Demand of Housing Are Inelastic in the Short