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WAEC Economics 2025 Question 21

Question 21

Price Determination

If the supply of a product with a perfectly elastic demand increases, there will be

  1. A.a fall in equilibrium price and an increase in equilibrium quantity.
  2. B.an increase in equilibrium price and quantity.
  3. C.an increase in equilibrium quantity while equilibrium price is fixed.
  4. D.a fall in equilibrium quantity while equilibrium price remains constant.
Show the answer and explanation

Answer: C (an increase in equilibrium quantity while equilibrium price is fixed.)

Explanation

With a horizontal demand curve, a rightward shift of supply raises quantity but leaves price unchanged.