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Perfectly elastic demand

Is a term used to relate to goods that have a price elasticity of demand value of infinity. This essentially means that the quantity demanded by consumers for these types of goods depends severely on the market price i.e. if the price increases or decreases this will cause demand to collapse to zero for this good. This is normally a result of their being a large number of perfect substitutes available in the market. 

We can represent a good that has a perfectly elastic demand curve as a demand curve that is horizontal at the market price. This is shown below:

Any amount of a good can be demanded at or below the price level contained in the demand curve while there will be no demand for the good at a higher price. As demand cannot be determined the price elasticity of demand is infinite. Price elasticity of demand is also infinite at the point where demand is zero.

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