If the Supply of Product X Is Perfectly Elastic, an Increase

question 360

Multiple Choice

If the supply of product X is perfectly elastic, an increase in the demand for it will increase

• A)equilibrium quantity but reduce equilibrium price.
• B)equilibrium quantity, but equilibrium price will be unchanged.
• C)equilibrium price but reduce equilibrium quantity.
• D)equilibrium price, but equilibrium quantity will be unchanged.

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Definitions:

Competitive Equilibrium

A state in a market where the supply of goods matches demand, with no incentive for price change, resulting from the competition among many buyers and sellers.

Factors Of Production

Inputs into the production process (e.g., labor, capital, and materials).

Profit

The financial gain made in a transaction or operation, calculated as the difference between the revenue earned and the costs incurred.

Short Run

A time period in economic analysis during which at least one factor of production is fixed, influencing the firm's decisions on output and pricing.