What does it mean when a demand curve is a rectangular hyperbola?
Open in App
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.
