<p>"Perfectly elastic demand" is not a situation associated with individual consumer demand, it is a concept related to the market demand schedule.  </p>

<p>And then, it does not describe any rigorous aggregation of individual demands, but instead, it expresses <em>demand as perceived by the firms</em> and is related to firm competition, not consumer preferences:  </p>

<p>If a firm increases its price it will lose all customers, but because they will shop elsewhere, not because their utility maximization tells them to stop consuming  the product. So it does <em>not</em> say that "consumer demand will drop to zero" -it will do so for the specific firm, not for the market.</p>

<p>As for <em>decreasing</em> the price, the firm has no reason to do it, since it can sell all the product it can at the going price.  </p>

CC BY-SA 3.0
2017-11-12T02:09:51.850Z
2017-11-12T02:09:51.850Z
Alecos Papadopoulos
<p>In the case of a perfectly elastic demand curve, when price rises the consumer is said to demand 0 units of the said commodity. However, graphically, even when price falls demand falls to 0. This seems to violate the demand law.
Is there an explanation for this phenomenon or is the graph supposed to be interpreted differently?</p>

CC BY-SA 3.0
2017-11-11T17:56:58.500Z
Quantity demanded in that case is not 0, it would be as large as quantity supplied is.
Herr K.
<supply-and-demand><elasticity>
Is the law of demand violated in the case of perfectly elastic demand?
Amat
# Is the law of demand violated in the case of perfectly elastic demand?

(Asked by: username_0 on 2017-11-11)

In the case of a perfectly elastic demand curve, when price rises the consumer is said to demand 0 units of the said commodity. However, graphically, even when price falls demand falls to 0. This seems to violate the demand law.
Is there an explanation for this phenomenon or is the graph supposed to be interpreted differently?

**Tags:** supply-and-demand, elasticity
> **Comments:**
> **username_1**: Quantity demanded in that case is not 0, it would be as large as quantity supplied is.  

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## 1 answers

### Answer by username_2 on 2017-11-12. Score: 0

"Perfectly elastic demand" is not a situation associated with individual consumer demand, it is a concept related to the market demand schedule.

And then, it does not describe any rigorous aggregation of individual demands, but instead, it expresses *demand as perceived by the firms* and is related to firm competition, not consumer preferences:

If a firm increases its price it will lose all customers, but because they will shop elsewhere, not because their utility maximization tells them to stop consuming the product. So it does *not* say that "consumer demand will drop to zero" -it will do so for the specific firm, not for the market.

As for *decreasing* the price, the firm has no reason to do it, since it can sell all the product it can at the going price.


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