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Questions
With the help of diagrams, show the effect of a change in demand (or shift in demand curves) on equilibrium price and quantity of a commodity when Supply curve is perfectly elastic.
Using a diagram, show the effect of a change in demand (or shift in demand curves) on the price and quantity in the following situation:
When the supply curve is perfectly elastic.
Show with the help of a diagram the effect of change in demand on equilibrium when supply is perfectly elastic.
Diagram
Very Short Answer
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Solution
A change in demand only changes the equilibrium amount when the supply curve is perfectly elastic, which means it is parallel to the X-axis. The price stays the same (OP). This is illustrated in the given figure.
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