Question

If the demand of a product is perfectly elastic, then what will be the effect on its equilibrium price and quantity, when the supply of the product increases?

Answer 1

Answer:

when demand is perfectly elastic, then change in supply doesn't affect the equilibrium price of the commodity. it only changes the equilibrium quantity. Original equilibrium is determined at point E,when perfectly elastic demand curve DD and original supply curv DD and the original supply curve SS intersect each other