Question : Statement 1: A consumer's demand for a good is income inelastic.
Statement 2: A change in the consumer's income does not significantly affect their demand for the good.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statement 1 and statement 2 are true.
Option 4: Both statement 1 and statement 2 are false.
Correct Answer: Statement 1 is false, and statement 2 is true.
Solution : The correct option is (b) Option B: Statement 1 is false, and statement 2 is true.
Statement 1 is false. If a consumer's demand for a good is income inelastic, it means that a change in the consumer's income would not significantly affect their demand for the good. However, the concept of income elasticity of demand measures the responsiveness of quantity demanded to changes in income. If the income elasticity of demand for a good is less than 1 , it indicates income inelasticity.
Statement 2 is true. When a good is income inelastic, a change in the consumer's income does not lead to a significant change in their demand for the good. This implies that the quantity demanded of the good is relatively unaffected by changes in income.
Related Questions
Trending Articles/News
