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.
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 is true. Perfectly inelastic demand refers to a situation where the quantity demanded does not change at all in response to any change in price. Regardless of how much the price of the product changes, the quantity demanded remains constant.
Statement 2 is false. Perfectly inelastic demand means that the quantity demanded does not change at all in response to price changes. It does not imply an infinite change in quantity demanded. In fact, in the case of perfectly inelastic demand, the change in quantity demanded is zero regardless of the magnitude of the price change.
Therefore, the statement 1 is true, and statement 2 is false.
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