In perfectly elastic supply, the supply curve

1. Analyze the question The question asks what a supply curve looks like when supply is perfectly elastic.

2. Explain the concept Price elasticity of supply (PES) measures how much quantity supplied responds to a change in price:

PES = % change in quantity supplied ÷ % change in price

• Perfectly inelastic supply (PES = 0): quantity does not change whatever the price, so the curve is vertical.
• Perfectly elastic supply (PES = ∞): suppliers will supply any quantity at one particular price, but nothing at all if the price falls below it. So the curve is horizontal.
• Normal supply: the curve slopes upward, because higher prices lead to higher quantity supplied.

3. Step-by-step solution

• Put price on the vertical axis and quantity on the horizontal axis.
• Perfectly elastic supply means an infinitely large change in quantity for a tiny change in price (PES approaches infinity).
• Quantity can take any value at that one price, so the curve runs flat, parallel to the quantity axis.

4. Check the options

• A. Vertical: this is perfectly inelastic supply. ✗
• B. Horizontal: this is perfectly elastic supply. ✓
• C. Slopes upward: this is the normal supply curve. ✗
• D. Slopes downward: this is not a typical supply curve. ✗

5. Exam tip Remember: "Elastic = Even (flat/horizontal)" and "Inelastic = Immovable (vertical)". The same rule applies to demand curves. Perfectly elastic is horizontal and perfectly inelastic is vertical.