Perfectly Inelastic Supply
Definition
Perfectly inelastic supply refers to a situation where the quantity supplied does not respond at all to changes in price. In other words, no matter how much the price changes, the quantity supplied remains constant.
Analogy
Imagine you have a vending machine that sells only one type of candy bar. No matter how much people are willing to pay for it, the vending machine will always dispense the same number of candy bars.
Related terms
Elasticity of Supply: The measure of how responsive the quantity supplied is to changes in price. If supply is perfectly inelastic, elasticity of supply would be zero.
Fixed Supply: A situation where the quantity supplied cannot be changed regardless of changes in price or demand.
Price Floor: A government-imposed minimum price set above the equilibrium price, which can result in a surplus when supply is perfectly inelastic.
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