ICSE Class 10 Answered

Perfectly elastic supply is an imaginary situation. If cost of production increases with rise in output, then the supply will increase with rise in prices. Say many agriculturists produce apples Add all the costs incurred in the production such as land, seeds, fertiliser and labour and the costs is Rs 1000 to produce apples. Here the price cannot decline below Rs 1000. If consumers are not willing to pay Rs 1000, then the supply will become zero because it is not profitable to produce apple. This is an example of perfectly elastic supply.