If the demand for some good fluctuates, but supply is constant, then which of the following combinations would generally yield the greatest price fluctuations?
A) small demand fluctuations and inelastic supply
B) small demand fluctuations and a unit elastic supply
C) large demand fluctuations and inelastic supply
D) small demand fluctuations and elastic supply
E) large demand fluctuations and elastic supply

Question

Quizplus · Accepted Answer

Large demand fluctuations combined with inelastic supply result in significant price changes because the quantity supplied cannot adjust to changes in demand, leading to greater price volatility.

If the Demand for Some Good Fluctuates, but Supply Is