For each of the following assume that the demand curve shifts while the supply c

Question

For each of the following assume that the demand curve shifts while the supply curve remains constant. What is the direction of the demand shift and relative elasticity of supply?

a. Prices do not change. Quantity increases significantly.

Supply is (highly elastic,higly inelastic, perfectly elastic, perfectly inelastic) and demand shifts (in, out)?

b. Price falls significantly. Quantity hardly changes at all.

Supply is (highly elastic,higly inelastic, perfectly elastic, perfectly inelastic) and demand shifts (in, out)?

c. Prices do not change. Quantity decreases significantly.

Supply is (highly elastic,higly inelastic, perfectly elastic, perfectly inelastic) and demand shifts (in, out)?

Explanation / Answer

a.perfectly elastic
since price is not changing but quantity is changing
significantly

Demand out

b. highly inelastic
since changes in price level have little effect on quantity

Demand shift in

c.perfectly inelastic

Demand shift in

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