Statement I: A perfectly elastic demand curve has the same elasticity as a perfectly inelastic demand curve.
Statement II: When elasticity is .2,a 1% decline in price will raise quantity demanded by .2%.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is false because a perfectly elastic demand curve has an elasticity of infinity, which is not the same as the elasticity of a perfectly inelastic demand curve, which has an elasticity of 0. 
Statement II is true because the elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. So if elasticity is 0.2, a 1% decline in price will raise quantity demanded by 0.2%.

Statement I: a Perfectly Elastic Demand Curve Has the Same