What does a horizontal supply curve represent?

A horizontal supply curve represents perfectly elastic supply. This means that suppliers are willing to provide any quantity of the good or service at a specific price, but will not supply any of the product at prices above that level. In this scenario, even a small increase in price leads to an infinite increase in quantity supplied, reflecting the idea that suppliers are highly responsive to price changes.

In perfectly elastic supply, the graph of the supply curve is a straight line parallel to the quantity axis. This is characteristic of markets where the good is homogeneous, and suppliers can enter or exit the market freely; thus, they are willing to adjust their output instantly to any price change at that specific level.

The other options refer to different types of elasticity. Inelastic supply would indicate that quantity supplied changes very little with price changes, while perfectly inelastic supply would mean that quantity supplied remains constant regardless of price changes. Unit elastic supply suggests that the percentage change in quantity supplied is equal to the percentage change in price, which is not represented by a horizontal curve. Therefore, the correct answer is clearly linked to the concept of perfect elasticity in the supply context.