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.
Question : Statement 1: The price elasticity of demand for a normal good is always negative.
Statement 2: Normal goods exhibit an inverse relationship between price and quantity demanded.
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: 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: 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.
Question : Statement 1: The midpoint formula is used to calculate price elasticity of demand when price changes between two points on the demand curve.
Statement 2: The midpoint formula divides the percentage change in quantity demanded by the average percentage change in price.
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