If the demand curve for a life-saving medicine is perfectly inelastic, a reduction in supply will cause the equilibrium price to:
A)rise and the equilibrium quantity to fall.
B)rise and the equilibrium quantity to stay the same.
C)rise and the equilibrium quantity to rise.
D)stay the same and the equilibrium quantity to fall.

Question

If the demand curve for a life-saving medicine is perfectly inelastic, a reduction in supply will cause the equilibrium price to:
A)​rise and the equilibrium quantity to fall.
B)​rise and the equilibrium quantity to stay the same.
C)​rise and the equilibrium quantity to rise.
D)​stay the same and the equilibrium quantity to fall.

Quizplus · Accepted Answer

If the demand curve for a life-saving medicine is perfectly inelastic, it means that consumers are willing to pay any price for the medicine because their need for it is urgent and necessary for their survival. Therefore, a reduction in supply will not affect the quantity demanded and the equilibrium quantity will remain the same. However, since there is less supply available, the equilibrium price will rise to reflect the scarcity of the product.

If the Demand Curve for a Life-Saving Medicine Is Perfectly