Under normal downward sloping demand curve and fully elastic supply curve of a commodity, an exogenous decrease in demand would lead to
- A.increase in equilibrium price and quantity
- B.decrease in equilibrium price and quantity
- C.decrease in equilibrium quantity and no change in price
- D.increase in equilibrium price and no change in quantity
Show answer
A fully (perfectly) elastic supply curve is a horizontal line: sellers will supply any quantity at one fixed price and nothing below it.
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