Economics Elasticity Of Supply Questions Long
In a perfectly elastic supply curve, the relationship between price and quantity supplied is that any change in price will result in an infinite change in quantity supplied. This means that suppliers are willing and able to supply an unlimited amount of a good or service at a specific price.
In a perfectly elastic supply curve, the supply is perfectly responsive to changes in price. This occurs when the price elasticity of supply is equal to infinity. It implies that suppliers can increase the quantity supplied without any increase in cost or time. This situation is rare in real-world markets and is typically seen in highly competitive markets where suppliers have excess capacity and can easily adjust their production levels.
The perfectly elastic supply curve is represented by a horizontal line on a graph, indicating that suppliers are willing to supply any quantity at a specific price. As the price increases, the quantity supplied remains constant, and as the price decreases, the quantity supplied also remains constant.
For example, let's consider a market for a specific type of smartphone charger. If the price of the charger is $10, suppliers are willing to supply an unlimited quantity of chargers at that price. If the price increases to $15, suppliers will still supply an unlimited quantity. Similarly, if the price decreases to $5, suppliers will continue to supply an unlimited quantity.
It is important to note that the concept of a perfectly elastic supply curve is theoretical and does not accurately represent most real-world markets. In reality, there are limitations to production capacity, availability of resources, and other factors that prevent suppliers from infinitely increasing their supply in response to price changes.