An increase in supply caused no change in the equilibrium price of a good.Thus,demand must be
A) perfectly inelastic.
B) vertical.
C) perfectly elastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

According to the scenario mentioned, an increase in supply did not affect the equilibrium price. This can happen only if the demand for that good is perfectly elastic, which means that any increase or decrease in supply will have no effect on its price. In a perfectly elastic demand curve, the price elasticity of demand is infinite, and the demand curve is horizontal. Therefore, Choice C is the correct answer.

An Increase in Supply Caused No Change in the Equilibrium