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Consider the following statements when answering this question
I. When a competitive industry's supply curve is perfectly elastic, then the sole beneficiaries of a reduction in input prices are consumers.
II. Even in competitive markets firms have no incentives to control costs, as they can always on cost increases to consumers.
A) I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) I and II are false.

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Answer:

B) I is true, and II is false.

Explanation: A Competitive industry is an industry made up of firms that produce similar product or render similar services to the Consumers.

Perfectly elastic supply curve: This is a term used to describe a supply curve that changes at the slightest change in the price of goods produced and services rendered within an economy over a given period of time.