Question : Statement 1: Slope of demand curve is based on the percentage change in price and quantity.
Statement 2: Due to inverse relationship between price and demand, the demand curve slopes downwards.
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 false, and statement 2 is true.
Solution : The correct answer is (D) Statement 1 is false, and statement 2 is true.
Statement 1 is false. The slope of a demand curve is not based on the percentage change in price and quantity. Instead, it is based on the change in quantity divided by the change in price. The slope represents the ratio of the absolute change in quantity demanded to the absolute change in price, not the percentage change.
Statement 2 is true. According to the law of demand, there is an inverse relationship between the price of a good and the quantity demanded. When the price of a good increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases. As a result, the demand curve slopes downwards from left to right.
Therefore, statement 1 is false, and statement 2 is true.
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