The town of Whoovile wants to increase the amount of affordable housing in town. Assume that housing is a perfectly competitive industry in Whooville, and that firms have increasing marginal costs. The mayoral candidates propose different policies. Candidate Max wants to give construction companies a tax break and reduce the amount of taxes paid on each apartment unit. Draw graphs showing the effect of a tax break per apartment on the price and quantity of housing in the short run and in the long run.
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