Question

Statement (1): Demand for gasoline is less elastic.

Statement (2): Demand for food is elastic.

Options

• Both the statements are true.

• Both the statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Statement 1 is true and Statement 2 is false.

Explanation:

• Statement (1): Gasoline is a daily requirement for vehicle owners, with few alternatives available. People still need to commute to work or transport items regardless of price increases, hence demand is relatively less elastic.
• Statement (2): Food, as a general category, is absolutely necessary for human survival. People cannot quit eating when prices rise, therefore aggregate demand for food is very inelastic rather than elastic.