Perfectly elastic goods have substitutes that are identical in characteristics and so consumers will buy the lowest priced item. As a result, all producers can only charge the market price for that good. The other extreme is a good with a vertical demand curve and is perfectly inelastic . Perfectly inelastic goods have no substitutes and are necessities. An example of this type of good is insulin or other pharmaceuticals that are required for someone to live.
Consumers find a way to continue buying the good.
The price elasticity of supply looks at how the quantity supplied produced by a firm changes with output. The official formula is to take the percentage change in the quantity supplied of a good over the percentage change in the price of that good . Like the demand curve, the price elasticity of supply varies along the supply curve. Many firms have supply curves that begin as very elastic and relatively flat, but then abruptly become very inelastic or steeply sloped at some threshold of output. The flat or elastic part of the supply curve represents excess capacity .