Question

Unitary elastic demand.

Answer 1

Unitary Elastic Demand $(e=1)$:
When proportionate or percentage change in quantity demanded is exactly equal to proportionate or percentage change in price, then demand is said to be unitary elastic. For instance a $10$% fall in price of a commodity leads to $10$% rise in demand of that commodity.
$Ed=\frac{\text{change in Qty. demanded}}{\text{change in price}}Ed=\frac{10}{10}=1$
$\therefore Ed=1$
In this case the demand curve slopes downwards uniformly. This demand curve is called a rectangular hyperbola as shown in the figure. The unity elasticity of demand is a dividing line to distinguish between relatively elastic demand and relatively inelastic demand.