What are the examples for PERFECTLY ELASTIC SUPPLY??

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Solution

A commodity is said to have perfectly elastic supply if the quantity supplied of that commodity changes infinitely with a small even change in its price. A perfectly elastic supply situation can be seen in the perfectly competitive market where there are infinitely large number of buyers and sellers and producers earn only a normal profit that is zero profit (TR = TC). If the price falls even by a slight amount, sellers will stop selling as they will be earning losses. A perfectly elastic supply rarely exists in real life. Mostly, elasticity of supply is between the extreme cases i.e. perfectly elastic supply and perfectly inelastic supply. Commodities which uses very expensive inputs have almost perfectly elastic supply. For ex. Diamond jewellery

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