Price (dollars per900800700600500400100 200 300 400 500 600 700 800 900 1000 1100 1200Quantity of apartmentsFIGURE 5-4rent-controlledpriceDemandRefer to Figure 5-4. What is the significance of the difference in theslopes of the short-run supply curve (S₁) and the long-run supplycurve (S₂) for apartments?Select one:OA. Over time, the demand for apartments shrinks in response tothe controlled prices - the elasticity of supply increases.OB. Over time, the supply of apartments increases in response tothe controlled prices - the elasticity of demand increases.O C. Over time, the supply of apartments shrinks in response tothe controlled prices - the elasticity of supply decreases.OD. Over time, the supply of apartments shrinks in response tothe controlled prices - the elasticity of supply increases.

The Elasticity of Supply is a measure of how the quantity supplied of a good or service changes in…

Answered: Refer to Figure 5-4. What is the…

Refer to Figure 5-4. What is the significance of the difference in the slopes of the short-run supply curve (S₁) and the long-run supply curve (S₂) for apartments?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Price (dollars per
900
800
700
600
500
400
100 200 300 400 500 600 700 800 900 1000 1100 1200
Quantity of apartments
FIGURE 5-4
rent-controlled
price
Demand
Refer to Figure 5-4. What is the significance of the difference in the
slopes of the short-run supply curve (S₁) and the long-run supply
curve (S₂) for apartments?
Select one:
OA. Over time, the demand for apartments shrinks in response to
the controlled prices - the elasticity of supply increases.
OB. Over time, the supply of apartments increases in response to
the controlled prices - the elasticity of demand increases.
O C. Over time, the supply of apartments shrinks in response to
the controlled prices - the elasticity of supply decreases.
OD. Over time, the supply of apartments shrinks in response to
the controlled prices - the elasticity of supply increases.

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Step 1: Introduce the concept of elasticity of supply.

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Step 2: Determine the significance of the difference in the slopes of the short and long run supply curve.

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