Question : Statement 1: A consumer's demand for a luxury good is income elastic.

Statement 2: As the consumer's income increases, their demand for luxury goods increases at a proportionately higher rate.

Question : Statement 1: A consumer's demand curve for normal goods slopes downward.

Statement 2: As the price of a normal good decrease, the consumer's quantity demanded of the good increases.

Question : Statement 1: If the price elasticity of demand for a product is -0.2, demand is considered inelastic.

Statement 2: Inelastic demand implies that a change in price leads to a proportionately smaller change in quantity demanded.

Question : Statement 1: The substitution effect occurs when a consumer switches from one good to another due to a change in relative prices.

Statement 2: The income effect refers to the change in quantity demanded of a good due to a change in the consumer's purchasing

Question : Statement 1: The demand for a product is perfectly inelastic when quantity demanded remains constant regardless of price changes.

Statement 2: Perfectly inelastic demand implies that any change in price will cause an infinite change in quantity demanded.