Perfectly Elastic Demand

Demand is said to be perfectly elastic when a very small change in price produces an infinite change in quantity demanded. Here the price elasticity of demand is equal to infinite.

In the diagram 14, DD is the demand curve which is a horizontal straight line parallel to X-axis. It indicates that the price elasticity of demand is infinite.

In the real world, the cases of perfectly elastic and perfectly inelastic demand are rare. Actually, the demand is either relatively elastic or relatively.. When we say that demand is inelastic, we never mean it to be perfectly inelastic. It is understood to be relatively inelastic. Similarly when we say that demand is elastic is elastic we never mean it to be perfectly elastic. It is actually relatively elastic.