The correct answer is Option 2: An increase in demand causes price to change if supply curve is perfectly elastic.
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First statement: "An increase in demand causes price to change if the supply curve is perfectly inelastic." This is true. If supply is perfectly inelastic, meaning it cannot change, an increase in demand will only lead to a rise in price since quantity remains fixed.
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Second statement: "An increase in demand causes price to change if the supply curve is perfectly elastic." This is false. If the supply curve is perfectly elastic, it means the price remains constant regardless of changes in demand. When demand increases, the quantity supplied will increase, but the price will not change.
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Third statement: "A decrease in demand causes quantity to change if the supply curve is perfectly elastic." This is true. If supply is perfectly elastic, a fall in demand will lead to a decrease in quantity supplied, while the price remains unchanged.
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Fourth statement: "A decrease in supply does not change price if demand is perfectly elastic." This is true. If demand is perfectly elastic, the price remains constant, so any reduction in supply will only reduce the quantity transacted, without affecting the price.
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