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Chapter 18: Problem 5

A perfectly elastic supply curve is (LOI) a) a horizontal line b) a vertical line c) neither a horizontal nor a vertical line

Short Answer

Expert verified
a) a horizontal line.

Step by step solution

01

Express characteristics of a perfectly elastic supply curve

Perfectly elastic supply curve is a unique case where the slightest change in price will lead to an infinitely large change in quantity supplied. In other words, the quantity supplied is extremely responsive to any change in the price of the product.
02

Compare the characteristics of horizontal and vertical lines in a supply-demand graph

In a supply-demand graph, a horizontal line would represent a constant price level, as the price does not vary across different levels of quantity. On the contrary, a vertical line would represent a constant quantity level, as the quantity does not change across different price levels.
03

Choose the correct representation of a perfectly elastic supply curve

Based on the characteristics of horizontal and vertical lines in a supply-demand graph and the concept of price elasticity, the correct representation of a perfectly elastic supply curve is a horizontal line. This is because at a given price level, the quantity supplied can be infinite, with even the slightest price change leading to a drastic change in quantity supplied. Therefore, the answer is: a) a horizontal line.

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Most popular questions from this chapter

The advertiser wants to push her product's demand curve (LO2) a) to the right and make it more elastic b) to the right and make it less elastic c) to the left and make it more elastic d) to the left and make it less elastic

Demand is elastic when (L.O1) a) percentage change in price is greater than percentage change in quantity b) percentage change in quantity is greater than percentage change in price c) the demand curve is vertical d) price increases raise total revenue

When demand is relatively inelastic and supply is relatively elastic, the burden of a tax will be borne ( \(\mathrm{OO})\) a) mainly by sellers b) mainly by buyers c) equally between sellers and buyers d) it is impossible to determine the relative burdens of the tax

If your income goes down by 15 percent and you cut back on your manicures by 25 percent, then your demand for manicures is (LO4) a) income elastic b) income inelastic c) income elastic and income inelastic d) neither income elastic nor income inelastic

Statement L. A perfectly elastic demand curve has an elasticity of zero. Statement II. When demand is elastic and price is raised, total revenue will fall. (LOl) a) Statement I is truc, and statement II is false. b) Statcment II is true, and statement I is false. c) Both statements are true. d) Roth statements are false.
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