The correct answer is Option 3: C-3
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Explanation:
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A. Effect of demand in case of perfectly elastic supply
- When supply is perfectly elastic, the supply curve is horizontal.
- Any increase or decrease in demand affects only the quantity, while the price remains constant.
- Incorrect match: It should match "Increase or decrease in demand does not cause a change in price" instead of "Increase or decrease in demand causes a change in equilibrium price."
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B. Effect of supply in case of perfectly elastic demand
- When demand is perfectly elastic, the demand curve is horizontal.
- Any increase or decrease in supply affects only quantity, while the price remains constant.
- Incorrect match: This should be paired with "Increase or decrease in supply does not cause a change in price" instead.
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C. Effect of demand in case of perfectly inelastic supply
- When supply is perfectly inelastic, the supply curve is vertical.
- Any increase or decrease in demand affects only the price, while the quantity remains constant.
- Correct match: "Increase or decrease in demand causes a change in price with quantity constant."
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D. Effect of supply in case of perfectly inelastic demand
- When demand is perfectly inelastic, the demand curve is vertical.
- Any increase or decrease in supply affects only price, while quantity remains constant.
- Incorrect match: It should match "Increase or decrease in supply causes a change in price with quantity constant" instead of "Increase or decrease in demand does not cause any change in price."
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