Suppose demand is perfectly inelastic,and the supply of the good in question decreases.As a result,
A)the equilibrium quantity decreases,and the equilibrium price is unchanged.
B)the equilibrium price increases,and the equilibrium quantity is unchanged.
C)the equilibrium quantity and the equilibrium price both are unchanged.
D)buyers' total expenditure on the good is unchanged.

Question

Quizplus · Accepted Answer

When demand is perfectly inelastic, any change in supply will have no effect on the quantity demanded. Therefore, the equilibrium quantity remains unchanged. However, the decrease in supply leads to an increase in the equilibrium price as suppliers are able to charge more for the limited amount of the good available. As a result, buyers' total expenditure on the good will increase.

Suppose Demand Is Perfectly Inelastic,and the Supply of the Good