If the supply curve for housing is perfectly inelastic, a reduction in demand 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)fall and the equilibrium quantity to fall.
D)stay the same and the equilibrium quantity to fall.
E)fall and the equilibrium quantity to stay the same.

Question

Quizplus · Accepted Answer

When the supply curve is perfectly inelastic, the quantity supplied does not change regardless of price changes. Therefore, a reduction in demand will lead to a decrease in the equilibrium price, but the equilibrium quantity will remain the same.

If the Supply Curve for Housing Is Perfectly Inelastic, a Reduction