Which type of supply indicates infinite responsiveness to price changes?

Prepare for the SACE Stage 2 Economics exam with a comprehensive quiz. Study through flashcards and multiple-choice questions, each featuring hints and explanations for thorough understanding. Get ready for your exam!

The concept of perfectly elastic supply refers to a situation where producers are willing to supply any quantity of a good at a specific price, but none at any higher price. This means that even a tiny increase in price will result in the quantity supplied dropping to zero, highlighting that suppliers are extremely sensitive to price changes.

In this scenario, the supply curve is represented as a horizontal line, indicating that the quantity supplied can change dramatically with even the slightest change in price. This characteristic of perfectly elastic supply shows an infinite responsiveness to price, signifying a scenario where the supply can adapt infinitely to changes in market conditions without any constraint on quantity when the price remains constant.

Other types of supply, such as elastic supply, unit elastic supply, and inelastic supply, denote varying degrees of responsiveness but do not reach the extreme of infinite responsiveness. Elastic supply implies some responsiveness but not to the extent of being infinitely elastic; unit elastic supply means that the percentage change in quantity supplied equals the percentage change in price; and inelastic supply indicates that the quantity supplied does not change significantly with price changes. Thus, perfectly elastic supply is the only option that describes this infinite responsiveness accurately.

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