If a Supply Curve Is Perfectly Horizontal, What Is the Value

question 176

Short Answer

If a supply curve is perfectly horizontal, what is the value of the price elasticity of supply?

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Definitions:

Perfect Mobility

A theoretical condition where factors of production, such as labor and capital, can be freely moved from one use to another without costs or barriers.

Marginal Revenue

The revenue increment achieved by selling an extra unit of a product or service.

Marginal Cost

The expense associated with manufacturing an additional unit of a product or service.

Average Total Cost

The sum of all production expenses (both constant and fluctuating) divided by the overall output quantity.