Rectangular hyperbola
Topic: Consumer Behaviour, Demand and Elasticity · NCERT: Class 12, Ch 2 "Theory of Consumer Behaviour"; Class 12, Ch 3 "Production and Costs"
Meaning
A rectangular hyperbola is a curve on which the product of the two variables is always the same number. Its equation is xy = c. As a demand curve, it means p × q is constant, so |eD| = 1 at every point. Every rectangle drawn under the curve has the same area, so total spending is the same at every price. The same shape also describes the average fixed cost (AFC) curve. That is because AFC × output always equals total fixed cost, which does not change.
Example
A buyer always spends exactly ₹100 on milk. At ₹50 per litre they buy 2 litres, and at ₹25 per litre they buy 4 litres. Every price-quantity pair multiplies to 100, so their demand curve is a rectangular hyperbola.
Don't confuse with
- Straight-line demand curve: elasticity is 1 only at its midpoint, while a rectangular hyperbola has elasticity 1 everywhere.
Related concepts
- Price elasticity of demand
- Elastic demand
- Inelastic demand
- Unitary elastic demand
- Perfectly elastic demand
- Perfectly inelastic demand
- Elasticity along a linear demand curve
- Geometric measure of elasticity of demand
- Determinants of price elasticity of demand
- Elasticity and expenditure