Question on: JAMB Economics - 2018
If a demand curve that intersects a perfectly inelastic supply curve shift is rightward, then____________
A
only the quantity will increase
B
The prices will remain constant
C
the equilibrium price and quantity will increase
D
only the price will increase
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Correct Option: C
Here's the breakdown:
- Perfectly Inelastic Supply: This means the quantity supplied does not change regardless of price. The supply curve is a vertical line.
- Rightward Shift in Demand: This indicates an increase in demand; at any given price, consumers now want to buy more.
- Intersection: The point where the demand and supply curves meet determines the equilibrium price and quantity.
- Effect: With a perfectly inelastic supply, an increase in demand will only drive up the price. The quantity supplied remains the same because the supply is fixed.
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