Rent controls create large shortages in the long run rather than the short run because the long-run supply curve for apartments is inelastic.
False True
False.
Rent controls can create shortages in both the short run and the long run, but the reason for the long-run shortages is not primarily due to the inelasticity of the long-run supply curve. In the long run, the supply of rental housing can become more elastic as developers respond to market conditions. However, rent controls can discourage new construction and maintenance of existing rental units, leading to a decrease in the overall supply of available apartments. This can exacerbate shortages over time, as the controlled rents do not provide sufficient incentive for landlords to invest in or maintain their properties.