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If supply is inelastic, then a demand shift will have a ____ effect on _______ than on quantity.

User Lovetomato
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Answer:

Supply Inelastic: Demand shift will have more effect on price than on quantity

Step-by-step explanation:

Demand and supply reflect buyers & sellers - buying & selling tendencies.

Demand curve & supply curve are downward sloping & upward sloping respectively (∵law of demand , law of supply) & EQUILIBRIUM is where Demand = Supply & Demand, Supply curves intersect.

Elasticity is demand / supply responsiveness to price change. Inelastic Supply doesn't respond to price. It has a vertical curve parallel to y axis (unlike usual upward sloping curve).

Demand change shifts downward sloping demand curve - 1. Rightwards if Increase in Demand, 2. Leftwards if Decrease in Demand. 1st case (↑Dd) with inelastic supply leads to increase in price & no change in quantity, at new equilibrium. 2nd case (↓Dd) with inelastic supply leads to decrease in price & no change in quantity, at new equilibrium.

So, Change in Demand with Inelastic Supply changes only Equilibrium Price & not Equilibrium Quantity.

User Sakib
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