Question

When will an increase in demand lead to an increase in price but no change in the quantity supplied?

When does the equilibrium quantity in a market remain unchanged with a change in demand? Show it with the help of a diagram.

Answer 1

When the supply curve is perfectly inelastic, a change in demand (increase or decrease) brings about a change in equilibrium price, but the equilibrium quantity remains the same (OM). This is illustrated in the given Fig.