If the Demand Curve for a Life-Saving Medicine Is Perfectly

question 36

Multiple Choice

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:

• A) rise and the equilibrium quantity to fall.
• B) rise and the equilibrium quantity to stay the same.
• C) rise and the equilibrium quantity to rise.
• D) stay the same and the equilibrium quantity to fall.

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Definitions:

Long-Run Problem

Issues or challenges that affect an entity over an extended period, often requiring strategic planning to resolve.

Price Supports

Government interventions in markets to maintain commodity prices at certain levels through subsidies, purchases, or other means to protect producers from market volatility.

Trade Barriers

Measures imposed by governments to restrict or control international trade, often to protect domestic industries.

Sugar

A sweet-tasting soluble carbohydrate obtained primarily from sugarcane and sugar beet, widely used as a sweetener in food and drinks.