An increase in demand will increase prices most when supply is
A)elastic.
B)unit elastic.
C)inelastic (but not perfectly inelastic).
D)perfectly inelastic.

Question

Quizplus · Accepted Answer

When supply is perfectly inelastic, it means that the quantity supplied cannot change regardless of the price change. Therefore, if demand increases, prices will increase significantly because the quantity supplied cannot adjust to meet the higher demand.

An Increase in Demand Will Increase Prices Most When Supply