There are two pieces of information related to the demand and supply of the good in question: (i) the demand is perfectly inelastic, and (ii) the supply is neither perfectly inelastic nor perfectly elastic (i.e. 0 < E supply < ). Shock: Suppose there is an increase in the price of a major input used in the production of the good.

Draw a supply/demand diagram per information in (i) and (ii), and then shift one of the curve to reflect the shock mentioned. Denote on the diagram the original equilibrium price as P and the new equilibrium price as Pnew.