The long-run supply curve would be perfectly elastic when
A) an increase in demand does not cause a change in product price.
B) an increase in demand causes an increase in product price.
C) a decrease in demand causes an increase in short-run supply.
D) a decrease in demand causes an increase in product price.

Question

Quizplus · Accepted Answer

A perfectly elastic supply curve means that the quantity supplied can increase or decrease indefinitely without affecting the price of the product. Therefore, an increase in demand would not cause a change in product price, as there will always be enough supply to meet any increase in demand.

The Long-Run Supply Curve Would Be Perfectly Elastic When