PRC-3 · Chapter 10 · Question 40 of 70
A farmer brings highly perishable fresh strawberries to the Sunday market. Since they will rot by Monday, he must sell all of them today regardless of how low the price drops. What is the shape of his supply curve?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A perfectly vertical line (perfectly inelastic)
Explanation
Perishable goods must be sold immediately and cannot be withheld. Thus, the quantity supplied is fixed regardless of price, creating a vertical, perfectly inelastic supply curve.
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