The elasticity of demand, an economic concept, quantifies a good's quantity demanded responsiveness to price fluctuations. Unitary elastic demand occurs when this elasticity is precisely 1 across the entire demand curve. This specific scenario is graphically represented by a Rectangular Hyperbola.
The reason for this relationship is that any percentage alteration in price is precisely matched by an equivalent percentage change in the quantity demanded. Consequently, total revenue remains unaffected by price adjustments. This relationship is mathematically defined as:
\(E_d = 1\)
In this equation, \(E_d\) signifies the price elasticity of demand.
Graphically, a rectangular hyperbola demonstrates that changes in price are counterbalanced by proportional shifts in quantity, thereby preserving a constant expenditure or total revenue.