If demand for a seller's product is perfectly elastic,which of the following is true?
i.The firm will sell no output if it sets the price its product above the market price.
ii.There are many perfect substitutes for the seller's product.
iii.The firm will sell no output if it sets the price its product below the market price.
A) i only
B) ii only
C) iii only
D) i and ii
E) ii and iii

Question

Quizplus · Accepted Answer

When demand is perfectly elastic, any price above the market price will result in no sales because consumers can easily switch to numerous perfect substitutes, confirming both statements i and ii as true. Setting the price below the market does not result in no sales; instead, it could potentially increase sales, making statement iii incorrect.

If Demand for a Seller's Product Is Perfectly Elastic,which of the Following