If the demand curve is perfectly inelastic, then an increase in supply 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 result in no change in the quantity exchanged.

Question

If the demand curve is perfectly inelastic, then an increase in supply 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 result in no change in the quantity exchanged.

Quizplus · Accepted Answer

If the demand curve is perfectly inelastic, it means that no matter how much the supply increases, the quantity demanded will remain the same. As a result, the price will decrease due to the excess supply, but there will be no change in the quantity exchanged because demand remains constant. Therefore, the correct answer is D.

If the Demand Curve Is Perfectly Inelastic, Then an Increase