When demand is perfectly elastic and supply curve shifts right,
a. the price remains same and
b. quantity decreases.
Answer & explanation
Correct answer: option 3
The correct answer is Option 3: Partially correct
- Perfectly elastic demand means the demand curve is a horizontal line, indicating that the price remains constant regardless of changes in supply.
- When the supply curve shifts right (increase in supply), the quantity increases, not decreases.
- Statement (a) is correct: The price remains the same.
- Statement (b) is incorrect: The quantity decreases (this is wrong, it should increase).