When the demand curve is a rectangular hyperbola, it represents _________.

unitary elastic demand

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perfectly elastic demand

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perfectly inelastic demand

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relatively elastic demand

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Solution

The correct option is A unitary elastic demand
When the demand curve is a rectangular hyperbola, it represents unitary elastic demand. This can be explained under total outlay method, where the total expenditure remain same throughout the demand curve.

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Similar questions

If the demand for bread is ___________, a decrease in its price will lead to a fall in consumers’ total expenditure on bread.

(1) unitary elastic

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(3) elastic

(4) inelastic

dummy - If the demand for bread is ___________, a decrease in its price will lead to a fall in consumers’ total expenditure on bread.

(1) unitary elastic

(2)perfectly inelastic

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Elasticity of demand is different at different points of a demand curve, unless demand curve is a rectangular hyperbola.

Will the supply at a point on a positively sloped, straight line supply curve be unitary elastic, elastic or inelastic ?

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