If a single supplier produces such a small portion of the total market output that changes in its production have no impact on the overall market price:  the firm will eventually be forced out of business. the firm's supply curve is perfectly inelastic. demand for the firm's output is perfectly elastic. the market supply curve is horizontal.

Question
Asked Oct 16, 2019
If a single supplier produces such a small portion of the total market output that changes in its production have no impact on the overall market price:
 
  the firm will eventually be forced out of business.
  the firm's supply curve is perfectly inelastic.
  demand for the firm's output is perfectly elastic.
  the market supply curve is horizontal.
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Expert Answer

Step 1

To determine the impact of the change in production by a supplier who supplies very small proportion of the market that any change in its production does not change the market price.

Step 2

The correct answer is ‘Option C’.

Since the demand of the firm is perfectly elastic that means that the demand curve of that firm is horizontal straight line parallel to x-axis and any change in supply by that firm...

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Measurements of elasticity

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