Question

In the following Question, read the following statement and choose the correct alternative among those given:

Statement 1: Elasticity of demand for any commodity is generally less for higher income level groups.

Statement 2: A commodity having several uses has inelastic demand.

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:

Demand is generally less elastic for higher-income groups because price changes affect them less. A commodity with several uses has more elastic demand: a price change can alter how many of those uses consumers choose to satisfy.