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Perfectly Elastic Supply
Supply is said to be perfectly or infinitely elastic if the price is fixed at all levels of demand. The demand curve has been shown in the above diagram for the sake of clarity.
If the supply is perfectly elastic, the supply curve is a horizontal straight line and the elasticity of supply is equal to infinity.
When demand increases from quantity supplied increases but price stays fixed . Conversely, if demand falls, quantity supplied falls but price stays fixed.
This is the case of Government price control.
Limitation The degree or success with which the central bank can use its bank rate policy to control the total credit in the economy depends upon the interest elasticity of in
Q. Cheapening of Materials and Equipments? Expansion of an industry increases the demand for different kinds of materials and capital equipments. This will result in large scal
Assignment
gap between economic theory and business practice
Equilibrium Income In this model, aggregate desired expenditure has three components: Consumption, Investment and Government Expenditure:
A firm faces a perfectly elastic demand for its output at a price of $6 per unit of output. The firm, Though, faces an upward-sloped labor supply curve of E= 20w-120 W
What is an effective need of demand 1. An Effective Need: Effective need demands that there must be a need supported by the capacity and readiness to shell out. Henceforth there
Ajax has the following short run cost curve when tc=800000-5000Q+100Q2
The economic cost Unemployment represents a terrible waste of resources and means that the economy is producing a lower rate of output than it could do if there were full empl
Illustrate the application of economic theory to some business problems
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