A demand curve with unit elasticity at all prices is described as

A demand curve with unit elasticity at all prices is described as

• A. A vertical demand curve
• B. Perfectly elastic
• C. Horizontal
• D. Unit elastic everywhere

Answer: (D)

Unit elastic everywhere describes a demand curve where the price elasticity of demand is exactly one in magnitude at all prices. This means that the percentage change in quantity demanded is always equal to the percentage change in price (in magnitude), so when price rises or falls by a certain percent, quantity demanded changes by the same percent in the opposite direction. A curve with this property is a rectangular hyperbola, where quantity is inversely related to price (Q ∝ 1/P). In this case, PED is -1 at every point, and total revenue (P × Q) stays constant as price changes. The other shapes correspond to different elasticities: a vertical demand curve means quantity doesn’t respond at all to price, so elasticity is zero; a horizontal demand curve means quantity is infinitely responsive to price, so elasticity is infinite. These do not match unit elasticity everywhere.

Unit elastic everywhere describes a demand curve where the price elasticity of demand is exactly one in magnitude at all prices. This means that the percentage change in quantity demanded is always equal to the percentage change in price (in magnitude), so when price rises or falls by a certain percent, quantity demanded changes by the same percent in the opposite direction. A curve with this property is a rectangular hyperbola, where quantity is inversely related to price (Q ∝ 1/P). In this case, PED is -1 at every point, and total revenue (P × Q) stays constant as price changes.

The other shapes correspond to different elasticities: a vertical demand curve means quantity doesn’t respond at all to price, so elasticity is zero; a horizontal demand curve means quantity is infinitely responsive to price, so elasticity is infinite. These do not match unit elasticity everywhere.