Dave's answer was missing the "how-to", and Steven had additional helpful input as well. Hopefully this fills the gap, I figured it out while clicking around in my own "guest not responding to my inquiry response" issue:
If you've responded to the inquiry, and you want to Dismiss it, then the button is only located in one place - and it is unfortunately (and unhelpfully) not on the page where you can see the conversation with the guest and the other choices.
1) Click on the HOST Button. This takes you to the Dashboard.
2) Find the line where the guest in question has sent the inquiry. Inquiry should be in yellow.
3) Click that line
4) The dismiss button should be among the choices. Clicking in any other like will take you away from your dismiss button.
Seems there should be an easier way to do this than sending a bunch of hosts to find a button that can only be found on one page in order to dismiss the mulitples of inquiries a bunch of guests can send out.