When will a decrease in supply cause the largest increase in price
A)when both supply and demand are inelastic
B)when both supply and demand are elastic
C)when demand is elastic and supply is inelastic
D)when demand is inelastic and supply is elastic

Question

Quizplus · Accepted Answer

When both supply and demand are inelastic, a decrease in supply will cause a large increase in price because consumers are not sensitive to price changes (inelastic demand) and producers cannot easily increase supply (inelastic supply).

When Will a Decrease in Supply Cause the Largest Increase