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Question

What does it mean when a demand curve is a rectangular hyperbola?


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Solution

Rectangular hyperbola:

The hyperbola whose asymptotes are at right angles to each other is called a rectangular hyperbola.

When a percentage change in the quantity demanded is equal to a percentage change in price, then demand for such a commodity is said to be unitary elastic.

If the demand curve is a rectangular hyperbola, then the elasticity of demand is equal to unity at all points of the demand curve.


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