(Figure: Short and Long Run Shortages) Use the figure. At a rent controlled price of $800, the short-run shortage of apartments is ________ and the long-run shortage is ________.
A) 12,000; 4,000
B) 4,000; 12,000
C) 8,000; 4,000
D) 8,000; 12,000

Question

(Figure: Short and Long Run Shortages) Use the figure. At a rent controlled price of $800, the short-run shortage of apartments is ________ and the long-run shortage is ________. 
A) 12,000; 4,000 
B) 4,000; 12,000 
C) 8,000; 4,000 
D) 8,000; 12,000

Quizplus · Accepted Answer

At a rent controlled price of $800, the quantity demanded is 16,000 apartments and the quantity supplied is only 12,000 apartments, resulting in a short-run shortage of 4,000 apartments. In the long run, suppliers will leave the market due to lower profits, causing the supply to decrease to only 8,000 apartments, while the demand remains at 16,000 apartments. This results in a long-run shortage of 12,000 apartments. Therefore, the best choice is B, where the short-run shortage is 4,000 and the long-run shortage is 12,000.

(Figure: Short and Long Run Shortages) Use the Figure