If the supply curve for Hawaii housing is perfectly inelastic, what will happen to prices when demand increases?

When the supply curve for Hawaii housing is perfectly inelastic, it means that the quantity of housing available does not change regardless of the price. In this scenario, if demand for housing increases, the existing supply remains constant while more buyers are competing for the same number of houses.

As demand rises, buyers are willing to pay more for the limited housing available, which drives prices upward. Since the supply cannot respond to the increased demand—there are no additional houses that can be built or made available in the short term—prices must rise significantly to match the higher demand levels. This results in a higher equilibrium price in the housing market, reflecting the intense competition among buyers for the unchanged quantity of available housing.

In this context, the only correct outcome is a significant increase in prices, as the supply being perfectly inelastic means it cannot accommodate an increase in demand.