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JAMB Economics 1997 Question 16

Question 16

Price Determination

If a demand curve that intersects a perfectly inelastic supply curve shifts rightward, then

  1. A.the equilibrium price and quantity will increase
  2. B.only the price will increase
  3. C.only the quantity will increase
  4. D.the price will remain constant.
Show the answer and explanation

Answer: B (only the price will increase)

Explanation

Perfectly inelastic supply is a vertical line, so quantity cannot change; a rise in demand only raises the price.