Perfectly elastic demand is when consumers will buy any quantity of a good at one specific price, but if the price rises even slightly, quantity demanded immediately falls to zero, and if the price falls, quantity demanded becomes (in theory) infinitely large.

Quick Scoop

  • In perfectly elastic demand, price elasticity of demand is infinite (PED = ∞).
  • The demand curve is horizontal at the market price, meaning sellers are “price takers” and cannot change the price without losing all customers.
  • Consumers see many perfect substitutes, so even a tiny price increase makes them switch entirely to other sellers.
  • It is a theoretical extreme case that helps explain pricing in perfectly competitive markets and is rarely observed exactly in real life.

Simple example

Imagine many firms selling an identical product (like a generic commodity) at 10 units of currency per unit.

  • At price = 10, buyers are willing to purchase any quantity from a particular seller.
  • At price = 10.01, buyers instantly stop buying from that seller and switch to others still charging 10.
    This behavior captures what economists call perfectly elastic demand.

Information gathered from public forums or data available on the internet and portrayed here.