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- Subject
- Supply and Demandeconomics-mcqs › supply-and-demand
- Published
- 29 May 2019
- Last updated
- 28 May 2026
What happens when aggregate demand rises while aggregate supply remains completely inelastic?
Multiple choice question for Supply and Demand. Select an option, then review the explanation below.
Explanation
When aggregate supply is perfectly inelastic, it cannot respond to changes in demand by increasing output. Therefore, an increase in aggregate demand leads solely to higher prices without any change in output.
More Supply and Demand MCQs
Practice related questions from the same subject.
- 1.What is the typical shape of a demand curve?
- 2.What term describes a company earning profits beyond its normal profit level?
- 3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
- 4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
- 5.What are firms generally assumed to do with their costs and profits?