Perfect price elastic supply means
Perfect price elastic supply means
- A) No change in supply as price changes
- B) Any change in price completely stops supply
- C) Changes in price double supply
- D) A change in price leads to proportionate change in supply
Correct Answer: B) Any change in price completely stops supply
Explanation
This question is about perfect price elastic supply. Perfect price elastic supply means that any change in price completely stops supply. This means that if the price of a good or service changes, the quantity supplied will drop to zero.
It is important to understand that this is a theoretical concept and it is unlikely to see perfect price elastic supply in real-world situations. However, it is still an important concept to understand as it helps us to understand how changes in price can affect supply.
In contrast, if a good or service has an inelastic supply, then a change in price will not affect the quantity supplied very much. For example, if the price of oil increases, it may be difficult for oil producers to quickly increase the amount of oil they can produce, so the supply of oil remains relatively constant.
It is important for Economics students to understand the concept of supply and how it can be affected by changes in price. By understanding supply, students can better understand how markets work and how prices are determined.