Section A: Multiple Choice Questions Q5

Economics Aug 13, 2020

Section A: Multiple Choice Questions Q5. When supply is perfectly inelastic, a fall in price: a. Has a large effect on quantity supplied b. Has no effect on quantity supplied c. Has a modest effect on quantity supplied d. Shifts the demand curve to the right

Expert Solution

Answer: (b) has no effect on quantity supplied

Explanation:
Inelastic is an economic term referring to the static quantity of a good or service when its price changes. Perfectly inelastic supply means that the quantity supplied remains the same even if the price increases or decreases. Sellers are completely unresponsive to changes in price. Thus, option b is correct.

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