Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price
A)will decrease, but equilibrium quantity will increase.
B)and quantity will both decrease.
C)will increase, but equilibrium quantity will decline.
D)will increase, but equilibrium quantity will be unchanged.

Question

Quizplus · Accepted Answer

When the supply of a product is perfectly inelastic, it means that the quantity supplied does not change regardless of the price. Therefore, if there is an increase in demand for such a product, the equilibrium price will increase because buyers are willing to pay more, but the equilibrium quantity will remain unchanged because the quantity supplied cannot adjust.

Suppose the Supply of Product X Is Perfectly Inelastic