In which situation demand curve will be a rectangular hyperbola?
Answer & explanation
Correct answer: option 1
When elasticity of demand is 1 i.e. it is a unitary elastic demand curve, then it will form the shape of a rectangular hyperbola. 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.