Question

When does changes in supply have no effect on the equilibrium quantity?

Answer 1

Changes in supply have no effect on the equilibrium quantity when the demand curve is perfectly inelastic, meaning it is a vertical line. In this case, consumers are willing to purchase the same quantity of the good regardless of its price. So, even if supply increases or decreases (shifting the supply curve to the right or left), the equilibrium quantity remains fixed because the quantity demanded doesn't respond to price changes. Only the equilibrium price will adjust; it will fall if supply increases and rise if supply decreases, but the quantity exchanged in the market stays the same. This situation typically occurs with essential goods that have no substitutes, such as life-saving medications like insulin.