If the supply curve is perfectly elastic, then an increase in demand will:
A)increase both the price and the quantity exchanged.
B)increase the price but result in no change in the quantity exchanged.
C)increase the quantity exchanged but result in no change in the price.
D)decrease the price but not change the quantity exchanged.
E)do none of the above.

Question

Quizplus · Accepted Answer

A perfectly elastic supply curve means that suppliers can produce as much as demanded at a fixed price, so an increase in demand would result in an increase in quantity exchanged but would not affect the price. Therefore, choice C is the correct answer.

If the Supply Curve Is Perfectly Elastic, Then an Increase