Concept: Perfectly elastic supply describes a situation where producers are ready to sell any quantity at exactly one fixed price, making the supply curve a horizontal line.
Explanation:In economics, price elasticity of supply measures how much quantity supplied changes when price changes.
When supply is perfectly elastic, the price elasticity of supply is infinite,
Es=∞.
This means that a tiny fall in price causes quantity supplied to drop to zero, while at the set price any amount can be supplied.
When drawn on a graph, with price on the vertical axis and quantity on the horizontal axis, this relationship appears as a flat, perfectly horizontal line.
This curve tells us that producers will not accept a lower price, but they will supply unlimited output at that price.
The perfectly horizontal curve is largely a theoretical model because it is rarely observed in real-world markets.
Answer: In perfectly elastic supply, the supply curve is horizontal.