Choose the correctly matched pair from the following.

C-3

The correct answer is Option 3: C-3

A. Effect of demand in case of perfectly elastic supply: When supply is perfectly elastic, the supply curve is horizontal, meaning price remains constant regardless of changes in demand. Any increase or decrease in demand only affects the quantity supplied, not the price. Therefore, it should match the statement that demand changes do not cause a change in price, so the given pairing is incorrect.

B. Effect of supply in case of perfectly elastic demand: When demand is perfectly elastic, the demand curve is horizontal, indicating that price remains constant. Any increase or decrease in supply changes only the quantity traded, while the price remains unchanged. Therefore, it should match the statement that supply changes do not affect price, so the given pairing is incorrect.

C. Effect of demand in case of perfectly inelastic supply: When supply is perfectly inelastic, the supply curve is vertical, meaning quantity cannot change. Any increase or decrease in demand leads only to a change in price while quantity remains constant. Therefore, it correctly matches the statement that demand changes cause a change in price with quantity constant.

D. Effect of supply in case of perfectly inelastic demand: When demand is perfectly inelastic, the demand curve is vertical, so quantity remains fixed. Any increase or decrease in supply affects only the price, while quantity stays the same. Therefore, it should match the statement that supply changes cause a change in price with quantity constant, so the given pairing is incorrect.