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.
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.
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: 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.
Question : Statement 1: Elasticity of demand measures the sensitivity of quantity demanded to changes in price.
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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