If a single supplier produces such a small portion of the total market output that changes in its production have no impact on the overall market price,:
A) the firm will eventually be forced out of business.
B) demand for the firm's output is perfectly elastic.
C) the firm's supply curve is perfectly inelastic.
D) the market supply curve is horizontal.

Question

Quizplus · Accepted Answer

If changes in the production of a single supplier have no impact on the overall market price, it indicates that the demand for that firm's output is perfectly elastic. This means that consumers are extremely sensitive to changes in price and would likely switch to another supplier if the firm increased its prices even slightly. As a result, the firm has very little market power and cannot affect the market price.

If a Single Supplier Produces Such a Small Portion of the Total