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:

Price Taker

An individual or company that must accept prevailing prices in the market of its products or services, lacking the market power to influence prices on its own.

Break Even

The point at which total cost and total revenue are equal, resulting in no net loss or gain.

Minimum Output

refers to the lowest level of production that a company can sustain over the long term.

Amount of Profit

The financial gain made in a transaction or operation, calculated as total revenues minus total costs.