What characterizes a good with perfectly elastic demand?

A good with perfectly elastic demand is characterized by the fact that consumers will only purchase at a specific price. If the price rises even slightly above this level, consumers will stop buying the product completely, leading to a demand that falls to zero. This extreme reaction reflects a highly competitive market where substitutes are readily available and consumers are very sensitive to price changes.

In this scenario, the demand curve is horizontal, indicating that at the set price, the quantity demanded can be very high, but any increase in price results in an immediate drop in quantity demanded to zero. This concept is significant in understanding how price sensitivity can vary across different goods and how market conditions can affect consumer behavior.

The other options describe different types of demand elasticity that do not fit the criteria for perfectly elastic demand, which specifically hinges on the drastic reaction of quantity demanded due to price increases.