If the demand curve is horizontal and the supply curve is vertical,shifts of the supply curve will lead to
A) changes in the equilibrium quantity only.
B) changes in the equilibrium price only.
C) changes in both the equilibrium price and quantity.
D) changes in the quantity demanded only.

Question

Quizplus · Accepted Answer

Since the demand curve is horizontal, it is perfectly elastic and the quantity demanded at any given price stays constant. As for the supply curve, it is perfectly inelastic since it is a vertical line. Any shifts in the supply curve will either increase or decrease the quantity supplied at any given price, but it will not affect the price itself. Therefore, the only change that will occur with shifts in the supply curve is changes in the equilibrium quantity.

If the Demand Curve Is Horizontal and the Supply Curve