When a change in price causes a complete change in quantity supplied (PES = ∞), this describes:

When a change in price causes a complete change in quantity supplied (PES = ∞), this describes:

• A. Perfectly Elastic Demand
• B. Perfectly Elastic Supply
• C. Perfectly Inelastic Supply
• D. Unit Elasticity of Supply

Answer: (B)

Price elasticity of supply shows how much the quantity supplied responds to a price change. If the elasticity is infinite, the quantity supplied would respond completely to even the smallest price change, which means the supply curve is horizontal. At the given price, producers are willing to supply any amount, and a tiny price increase would lead to a very large (in theory unlimited) rise in quantity supplied. This situation is described as perfectly elastic supply. It’s about producers’ response, not consumers’, and it differs from inelastic supply (PES = 0) or unit elastic supply (PES = 1).

Price elasticity of supply shows how much the quantity supplied responds to a price change. If the elasticity is infinite, the quantity supplied would respond completely to even the smallest price change, which means the supply curve is horizontal. At the given price, producers are willing to supply any amount, and a tiny price increase would lead to a very large (in theory unlimited) rise in quantity supplied. This situation is described as perfectly elastic supply. It’s about producers’ response, not consumers’, and it differs from inelastic supply (PES = 0) or unit elastic supply (PES = 1).