Question : Statement 1: Price elasticity of demand can be calculated by dividing the percentage change in quantity demanded by the percentage change in price.
Statement 2: The formula for price elasticity of demand is (ΔQ/ΔP) * (P/Q).
Option 1: Both statements are true.
Option 2: Both statements are false.
Option 3: Statement 1 is true, and statement 2 is false.
Option 4: Statement 1 is false, and statement 2 is true.
Correct Answer: Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (C) Statement 1 is true, and statement 2 is false.
Statement 1: Price elasticity of demand can be calculated by dividing the percentage change in quantity demanded by the percentage change in price. This statement is true. The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price. This formula provides a measure of the responsiveness of quantity demanded to changes in price.
Statement 2: The formula for price elasticity of demand is (ΔQ/ΔP) * (P/Q). This statement is false. The correct formula for price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. It can be represented as:
Price Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Price)
So, statement 2 incorrectly represents the formula for calculating price elasticity of demand.
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Statement 2: Price elasticity of demand can be calculated by dividing the percentage change in quantity demanded by the percentage change in
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Statement 2: The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the
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Statement 2: If the percentage change in price is greater than the percentage change in quantity demanded, demand is considered elastic.
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