Question : Statement 1: Price elasticity of demand can have a value of zero for a perfectly inelastic demand curve.
Statement 2: Perfectly inelastic demand implies that quantity demanded does not change regardless of price changes.
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: Both statements are true.
Solution : The correct answer is (A) Both statements are true.
Statement 1: Price elasticity of demand can have a value of zero for a perfectly inelastic demand curve.
This statement is true. In a perfectly inelastic demand curve, the quantity demanded remains constant regardless of price changes. As a result, the percentage change in quantity demanded is zero, leading to a price elasticity of demand value of zero.
Statement 2: Perfectly inelastic demand implies that quantity demanded does not change regardless of price changes.
This statement is also true. Perfectly inelastic demand means that the quantity demanded does not change in response to price changes. The demand curve is vertical, indicating that quantity demanded remains constant at a specific level, irrespective of price fluctuations.
Therefore, both statements are true.
