A fully elastic supply curve means producers are willing to supply any quantity at a specific price. Any change in demand under such conditions will only affect the quantity, not the price, as long as the market quantity remains within the range where supply is fully elastic.
Under normal downward sloping demand curve and fully elastic supply curve of a commodity, an exogenous decrease in demand would lead to
Asked in UPSC CDS 1 2024 · Topic: Nature of Indian Economy (Developing Economy Characteristics)
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Answer: C. decrease in equilibrium quantity and no change in price
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