What characteristic defines a perfectly elastic demand curve?

A perfectly elastic demand curve is characterized by a completely horizontal line, indicating that consumers are willing to purchase any quantity of a good or service at a specific price, but will not purchase any if the price increases even slightly. This scenario reflects a high sensitivity of demand to price changes; any increase in price leads to a decrease in quantity demanded to zero.

In real-world terms, perfectly elastic demand is often associated with goods that have perfect substitutes. If one seller raises their price even slightly above the market price, consumers will immediately switch to a competitor, leading to a total loss of demand for the seller's product at that higher price. Thus, the defining feature of a perfectly elastic demand curve is that it manages to capture the utmost sensitivity of consumers to price changes – any price increase results in an immediate drop in quantity demanded to zero. This is why a completely horizontal curve accurately represents perfectly elastic demand.