for a given decrease in supply, the condition of demand that will result in the most significant change in price is when demand: a. inelastic b. perfectly inelastic c. perfectly elastic d. elastic

• perfectly inelastic

Explanation:

Normally, when supply decreases, less quantity is available for buyers, which will exert an upward pressure on the price. When the price of the goods increases, the buyers have three options, either to retain the same quantity of demand as before (when demand is perfectly inelastic), reduce the quantity of demand (when demand is inelastic) or completely shift their demand to close substitutes (when demand is perfectly elastic).

Now, these options determines what the suppliers will do with the price when supply goes down. If demand is perfectly inelastic, it means that even when price increases, demand remains the same and it is at this condition when there will be the most significant change in price.