For an input with a vertical supply curve,an increase in the demand for the input will lead to:

Question

Quizplus · Accepted Answer

An increase in demand for an input with a vertical supply curve (perfectly inelastic supply) will lead to an increase in the price paid for the input without a change in the quantity supplied. Since the supply does not change, the entire increase in the price translates to an increase in economic rent, making it equal to the payment to the input.

For an Input with a Vertical Supply Curve,an Increase in the Demand