The correct option is Increase in quantity with no change in price..
Explanation
Perfectly elastic demand ($E_d = \infty$) refers to a market situation where consumers are willing to purchase an infinite amount of a commodity at a specific price, but nothing at a price slightly higher. Graphically, the demand curve is a horizontal straight line parallel to the X-axis (Quantity axis). A rightward shift in the supply curve signifies an increase in supply, meaning producers are willing to sell more at the same price.
Analysis
The interaction between the demand and supply curves determines the equilibrium price and quantity:
- Initial Equilibrium: The market is in equilibrium where the downward-sloping supply curve intersects the horizontal demand curve.
- Shift in Supply: When the supply curve shifts to the right (from $S_1$ to $S_2$), the new supply curve intersects the horizontal demand curve at a point further to the right on the X-axis.
- Impact on Price: Because the demand curve is horizontal, the vertical level of the intersection (Price) does not change. The price remains fixed at the level determined by the perfectly elastic demand.
- Impact on Quantity: The intersection point moves to the right along the quantity axis, resulting in an increase in the equilibrium quantity.
Key Takeaway: In a market with perfectly elastic demand, any change in supply (shift in the supply curve) alters the equilibrium quantity but has no effect on the equilibrium price.