1. What is Perfectly Elastic Demand?

Perfectly elastic demand occurs when the price elasticity of demand (PED) is infinite (∞). This means that consumers are extremely sensitive to price changes, and any price increase will cause quantity demanded to drop to zero.

2. How Does the Calculator Work?

The calculator checks if the input PED value represents perfectly elastic demand:

Where:

• \( PED \) — Price Elasticity of Demand (unitless)
• \( \infty \) — Infinity, representing perfectly elastic demand

Explanation: When PED approaches infinity, it indicates that quantity demanded is infinitely responsive to price changes.

3. Characteristics of Perfectly Elastic Demand

Details: Perfectly elastic demand results in a horizontal demand curve, where consumers will buy any quantity at a specific price but nothing at a higher price. This is typical in perfectly competitive markets.

4. Using the Calculator

Tips: Enter the Price Elasticity of Demand (PED) value. The calculator will determine if it represents perfectly elastic demand (PED = ∞).

5. Frequently Asked Questions (FAQ)

Q1: What does PED = ∞ mean in practical terms?
A: It means consumers are extremely price-sensitive and will completely stop buying if the price increases even slightly.

Q2: What type of goods have perfectly elastic demand?
A: Typically homogeneous goods in perfectly competitive markets where consumers can easily find identical substitutes.

Q3: How is the demand curve shaped when PED = ∞?
A: The demand curve is perfectly horizontal at the market price level.

Q4: Can PED truly be infinite in real markets?
A: While theoretically possible, perfectly elastic demand is rare in practice and mostly exists in economic theory and perfectly competitive market models.

Q5: How does perfectly elastic demand affect pricing strategy?
A: Firms become price takers and cannot charge above the market price without losing all customers.