Question

Statement (1): Perfectly inelastic demand is an economic condition in which a change in the price of a good or service has no effect on the quantity demanded.

Statement (2): Perfectly elastic demand curve is parallel to the OY-axis.

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): An elasticity of zero means consumers purchase the exact same amount regardless of how high or low the price swings.
• Statement (2): A perfectly elastic demand curve is a horizontal line parallel to the OX-axis (quantity axis), while a curve parallel to the OY-axis (price axis) reflects perfectly inelastic demand.