Which of the following statements is not valid when the market supply curve is vertical?
A)Market quantity supplied does not change when the price changes.
B)Supply is perfectly inelastic.
C)An increase in market demand will increase the equilibrium quantity.
D)An increase in market demand will increase the equilibrium price.

Question

Quizplus · Accepted Answer

When the market supply curve is vertical, it means that the quantity supplied is fixed regardless of the price. Therefore, an increase in market demand will not increase the equilibrium quantity because the supply is already fixed. However, an increase in demand will lead to an increase in the equilibrium price, which is determined by the intersection of the demand curve and the vertical supply curve. Options A and B are valid statements for a vertical market supply curve, as the quantity supplied does not vary with the price change, and supply is perfectly inelastic.

Which of the Following Statements Is Not Valid When the Market