why is unitary elastic demand curve rectangular at hyperbola ?
Dear Student,
If the elasticity at every point along the demand curve is equal to 1 i.e. unitary elastic then the shape of the demand curve will be of a rectangular hyperbola. It means that a percentage fall in the price of the commodity will bring an equal percentage increase in the quantity demanded thus leaving the total expenditure unchanged. The rectangles formed under this curve will have constant area (areas represents the total expenditure).