If the supply of beach houses is fixed and perfectly inelastic,_____
A)the demand for the beach houses determines their price and the level of economic rent.
B)the supply of the beach houses determines their price and the level of economic rent.
C)the supply of the beach houses determines their price, and the demand for the beach houses determines the level of economic rent.
D)the demand for the beach houses determines their price, and the supply of the beach houses determines the level of economic rent.
E)the supply curve for beach houses is horizontal.

Question

Quizplus · Accepted Answer

If the supply of beach houses is fixed and perfectly inelastic, the quantity supplied cannot change regardless of the price. Therefore, the demand for beach houses determines the price and the level of economic rent that landlords can charge. The higher the demand, the higher the price and economic rent.

If the Supply of Beach Houses Is Fixed and Perfectly