If the supply of product X is perfectly elastic, an increase in the demand for it will increase
A)equilibrium quantity but reduce equilibrium price.
B)equilibrium quantity, but equilibrium price will be unchanged.
C)equilibrium price but reduce equilibrium quantity.
D)equilibrium price, but equilibrium quantity will be unchanged.

Question

Quizplus · Accepted Answer

When the supply of a product is perfectly elastic, it means that suppliers are willing and able to supply any quantity at a fixed price. Therefore, if demand increases, the equilibrium quantity will increase to meet this demand, but the equilibrium price will remain unchanged because the supply curve is horizontal at this price level.

If the Supply of Product X Is Perfectly Elastic, an Increase