Rent control policies tend to cause

a. relatively smaller shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run.

b. relatively smaller shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run.

c. relatively larger shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.

d. relatively smaller shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.

Question

Business

Amani Gibbs

4 July, 02:27

Rent control policies tend to cause

a. relatively smaller shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run.

b. relatively smaller shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run.

c. relatively larger shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.

d. relatively smaller shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.

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Answers (1)

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Alexzander Key · Answer 1

d. Relatively smaller shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.

Explanation:

"The adverse effects of rent control are less apparent to the general population because these effects occur over many years. In the short run, landlords have a fixed number of apartments to rent, and they cannot adjust this number quickly as market conditions change. Moreover, the number of people searching for housing in a city may not be highly responsive to rents in the short run because people take time to adjust their housing arrangements. Therefore, the short-run supply and demand for housing are relatively inelastic."

Reference: Gans, J., King, S., & Mankiw, N. G. (2011). Principles of microeconomics. Cengage Learning.