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.
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.
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.
Question : Statement 1: Demand for a product is perfectly elastic when quantity demanded becomes infinite at a specific price.
Statement 2: Perfectly elastic demand implies that any increase in price will cause quantity demanded to drop to zero.
Question : Statement 1: The price elasticity of demand for a product is zero when quantity demanded does not change with a change in price.
Statement 2: Zero price elasticity indicates a vertical demand curve.
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: Price elasticity of demand is not applicable to perfectly elastic demand.
Statement 2: Perfectly elastic demand implies that any change in price leads to an infinitely large change in quantity demanded.
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile