A Supply Curve That Is Parallel to the Price Axis

question 20

Multiple Choice

A supply curve that is parallel to the price axis is

• A) perfectly elastic.
• B) perfectly inelastic.
• C) relatively inelastic.
• D) unitary elastic.

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Definitions:

Elastic

A characteristic of demand or supply indicating a high responsiveness to changes in price.

Pure Rent

Income received by a landowner for the use of a natural resource, land, or location that is essentially in fixed supply.

Pure Rent

Income earned from owning a resource completely fixed in supply, with no additional production cost.

Fixed Supply

A situation where the quantity of a good available is constant and does not change with price.