If the supply curve for housing is perfectly inelastic, how will a reduction in demand affect the equilibrium price and quantity?
A) The price will rise and the quantity will fall.
B) The price will fall and the quantity will fall.
C) The price will fall and the quantity will stay the same.
D) The price will rise and the quantity will stay the same.

Question

Quizplus · Accepted Answer

If the supply curve is perfectly inelastic, it means that the quantity supplied cannot change regardless of changes in demand. Therefore, a reduction in demand will only result in a decrease in the equilibrium price, with no change in quantity. Hence, option C is correct.

If the Supply Curve for Housing Is Perfectly Inelastic, How