Question

1. Price elasticity of supply of a good is 0.8, its supply is said to be inelastic.
2. If the quantity supplied of a commodity remain the same whatever its price supply is said to perfectly inelastic.

Options

• Both (i) and (ii) are true

• Both (i) and (ii) are false

• Statement (i) is false and statement (ii) is true

• Statement (i) is true and statement (ii) is false

Answer 1

Both (i) and (ii) are true

Explanation:

• Statement (i) is true: If the price elasticity of the supply of a good is 0.8, it means that the supply is inelastic because the percentage change in quantity supplied is less than the percentage change in price.

• Statement (ii) is true: If the quantity supplied of a commodity remains the same regardless of its price, the supply is said to be perfectly inelastic. This is represented by a vertical supply curve, indicating that price changes do not affect the quantity supplied.