Question

In a situation of perfectly elastic supply, price of the commodity tends to remain constant, no matter demand increases or decreases.

• A. True
• B. False

Answer 1

The correct option is A True

True.
The price will remain unchanged under a perfectly elastic supply curve, no matter demand increases or decreases. This is because supply responds proportionately to the increase or decrease in demand, i.e., it only changes on the quantity axis, while, it is static on the price axis at a given price.