Asked by marah shabib on Jul 06, 2024
Verified
If the supply of steel is perfectly elastic,then an increase in the demand for steel will
A) increase the price of steel but have no effect on quantity supplied.
B) increase the quantity of steel supplies but have no effect on the price.
C) have no effect on the price or the quantity supplied.
D) decrease total revenue taken in by steel producers.
Perfectly Elastic
A market condition in which demand or supply for a good or service is infinitely sensitive to changes in price, leading to immediate adjustments.
Supply Of Steel
The total amount of steel available for use or sale, which could include production output, imports, and stored inventory.
Demand For Steel
The total market desire to purchase steel, influenced by various economic and industrial factors.
- Acquire knowledge about the theory of elasticity in economics and its relevance to the examination of demand and supply relationships.
- Understand the graphical representation of supply and demand curves under various elasticity conditions.
Verified Answer
RL
Richard LeccionesJul 12, 2024
Final Answer :
B
Explanation :
If the supply of steel is perfectly elastic, it means the quantity supplied can be increased without an increase in price. Therefore, an increase in demand for steel will only lead to an increase in the quantity supplied but not the price. This is because suppliers can easily adjust their output to meet the demand without affecting the price.
Learning Objectives
- Acquire knowledge about the theory of elasticity in economics and its relevance to the examination of demand and supply relationships.
- Understand the graphical representation of supply and demand curves under various elasticity conditions.