If the supply curve for a good is horizontal and the price is positive, then a leftward shift of the demand curve results in A

Economics Dec 08, 2020

If the supply curve for a good is horizontal and the price is positive, then a leftward shift of the demand curve results in

A. an increase in price.

B. no change in price.

C. a price of zero.

D. a decrease in price.

Expert Solution

The answer is B).

When there is a horizontal supply curve, there is no change in price after a leftward shift of the demand curve. This is because supply is perfectly elastic, so firms are willing to adjust quantity supplied of any quantity at the same price, to accommodate changes in demand.

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