If the supply of good A is perfectly elastic, a decrease in demand will:
A)reduce the equilibrium quantity traded, but leave the price unchanged.
B)reduce the equilibrium quantity traded, and reduce the price.
C)reduce the equilibrium price, but leave the quantity traded unchanged.
D)reduce the equilibrium price traded, but increase the quantity traded.

Question

If the supply of good A is perfectly elastic, a decrease in demand will:
A)​reduce the equilibrium quantity traded, but leave the price unchanged.
B)​reduce the equilibrium quantity traded, and reduce the price.
C)​reduce the equilibrium price, but leave the quantity traded unchanged.
D)​reduce the equilibrium price traded, but increase the quantity traded.

Quizplus · Accepted Answer

When the supply of a good is perfectly elastic, it means that suppliers are willing to supply any quantity at a fixed price. Therefore, if demand decreases, the quantity traded will decrease, but the price will remain unchanged because the supply curve is horizontal at this price level.

If the Supply of Good a Is Perfectly Elastic, a Decrease