Suppose that each serving of Mac & Cheese costs $0.50 to make no matter how many servings are produced. This means that the price elasticity of supply for Mac & Cheese is ________ and the supply curve is ________.
A)one; perfectly inelastic
B)zero; perfectly elastic
C)infinite; perfectly inelastic
D)infinite; perfectly elastic

Question

Quizplus · Accepted Answer

In this case, the supply curve is horizontal at P = $0.50, so supply is perfectly elastic with respect to price and the elasticity of supply is infinite.

Suppose That Each Serving of Mac & Cheese Costs $0