If the supply curve is perfectly inelastic, then an increase in demand will:
A)increase both the price and the quantity exchanged.
B)increase the price but result in no change in the quantity exchanged.
C)increase the quantity exchanged but result in no change in the price.
D)decrease the price but not change the quantity exchanged.
E)do none of the above.

Question

Quizplus · Accepted Answer

A perfectly inelastic supply curve means that the quantity supplied is completely unresponsive to changes in price. Therefore, an increase in demand will result in an increase in price but no change in the quantity exchanged. This is because suppliers cannot increase their output to meet the increase in demand, so the market price must rise in order to clear the market.

If the Supply Curve Is Perfectly Inelastic, Then an Increase