Question

The elasticity of demand on a rectangular hyperbola demand curve is ______.

Options

• relatively elastic

• relatively inelastic

• unitary elastic

• perfectly inelastic

Answer 1

The elasticity of demand on a rectangular hyperbola demand curve is unitary elastic.

Explanation:

A rectangular hyperbola demand curve represents a unique market scenario in which the price elasticity of demand (ed) is exactly equal to one (ed = 1) at every point along the curve. This mathematical feature exists because any % change in the product’s price causes an equivalent, absolutely proportional percentage change in the amount demanded. Consumer spending (Price × Quantity) remains constant regardless of market price changes.