A supply curve that is parallel to the horizontal axis suggests that:
A)when quantity supplied increases, price rises
B)the relationship between price and quantity supplied is inverse
C)a change in demand will change price in the same direction
D)the relevant time period is the immediate run
E)in the long run, additional units of output will be forthcoming without an increase in price, in a constant cost industry

Question

Quizplus · Accepted Answer

A supply curve that is parallel to the horizontal axis indicates that the quantity supplied is fixed, regardless of changes in price. In other words, in the long run, additional units of output can be produced without an increase in price because the industry is operating at constant costs. Therefore, choice E represents the best answer.

A Supply Curve That Is Parallel to the Horizontal Axis