The graph to the right illustrates a general principle. A shift is supply has a large impact on market price and a small impact on equilibrium quantity, when demand is inelastic.

   In the same way, a supply shift will have a large impact on quantity and a small impact on price, when demand is very elastic. This is why a modest change in interest rates can have a significant impact on the markets for new cars and housing; two goods for which demand is very elastic.

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