Write ‘true’ or ‘false’ with a reason:If 5% increase in P caus

1.	Write ‘true’ or ‘false’ with a reason:If 5% increase in P causes 5% increase in expenditure on Good-X, elasticity of demand = 1.
Answer» False It is a situation of zero price elasticity of demand. Because, when expenditure on the commodity is increasing proportionate to increase in price, total purchase of the commodity remains constant. Constant purchase means zero elasticity of demand.

Write ‘true’ or ‘false’ with a reason:If 5% increase in P causes 5% increase in expenditure on Good-X, elasticity of demand = 1.

Answer»

False

It is a situation of zero price elasticity of demand. Because, when expenditure on the commodity is increasing proportionate to increase in price, total purchase of the commodity remains constant. Constant purchase means zero elasticity of demand.

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Write ‘true’ or ‘false’ with a reason:If 5% increase in P causes 5% increase in expenditure on Good-X, elasticity of demand = 1.

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