If the supply curve for aspirin is perfectly elastic, what effect will a reduction in demand have on the equilibrium price and equilibrium quantity?
A) The price will rise and the quantity will fall.
B) The price will rise and the quantity will stay the same.
C) The price will fall and the quantity will fall.
D) The price will stay the same and the quantity will fall.

Question

Quizplus · Accepted Answer

A perfectly elastic supply curve means that the supply can adjust to any demand at a constant price. Therefore, if demand falls, the quantity supplied will decrease to meet the lower demand, but the price will remain unchanged.

If the Supply Curve for Aspirin Is Perfectly Elastic, What