If supply is perfectly inelastic, then a subsidy paid to buyers of a good can never increase the size of the market.

Name: If supply is perfectly inelastic, then a subsidy paid to buyers of a good can never increase the size of the market.
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Question

Quizplus · Accepted Answer

If supply is perfectly inelastic, the quantity supplied remains constant regardless of changes in price. Therefore, any subsidy paid to buyers does not affect the price or quantity supplied, and thus does not increase the size of the market.

If Supply Is Perfectly Inelastic, Then a Subsidy Paid to Buyers