Question

The price of coffee rose sharply last month, while the quantity sold remained the same. Five of the Big Bang Theory friends suggested various explanations.

Use the following table to identify who of the friends correctly explained the changes in the price and quantity of coffee. Note: there may be more than one

Explanation	Correct?
Sheldon: Demand increased, but it was perfectly inelastic.
Raj: Supply decreased, but demand was perfectly inelastic.
Howard: Supply decreased, but demand was unit elastic.
Leonard: Demand increased, but supply was perfectly inelastic.
Penny: Demand increased, but supply decreased at the same time.

Answer 1

It is possible that as demand changed the supply is unresponsive to the coffee price increase or is perfectly inelastic keeping the final quantity of coffee sold constant(as contended by Leonard).Now,it might also be true that the demand might be completely unresponsive to the price change or perfectly inelastic and as a result the decrease in supply does not have any impact on the equilibrium quantity thereby again keeping the quantity sold unchanged(as proposed by Raj).Finally,as the demand for coffee increases initially the price increases consequently but later the supply of coffee decreased which again restored the equilibirum quantity of coffee to its original level(as suggested by Penny).

Hence,Raj,Leonard and Penny are correct.