What is rectangular hyperbola curve?
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.
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