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CBSE Class 12-commerce Answered

What is rectangular hyperbola curve?
Asked by Topperlearning User | 25 Apr, 2016, 09:33: AM
answered-by-expert Expert Answer

Rectangular hyperbola is a curve under which all rectangular areas are equal. When the elasticity of demand is equal to unity (ed = 1) at all points of demand curve, then the demand curve is rectangular hyperbola. It is a downward sloping curve as given in figure below.

 

  

 

In the case of any two points of A and B on the curve, each rectangular area shows total expenditure on the good. Thus, the total expenditure on the good remains constant even as the price of a good increases or decreases.

Answered by | 25 Apr, 2016, 11:33: AM
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