Economics · Elasticity of Demand
Given below are two statements: Statement I: The price elasticity of demand is greater when more and better substitutes are available for the commodity. Statement II: Normal goods for which income elasticity of demand (EI) is greater than 1 (EI > 1) are called luxuries, while those for which EI is between zero and one (0 < EI < 1) are considered necessities. In the light of the above statements, choose the most appropriate answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I is incorrect but Statement II is correct
- 2Statement I is correct but Statement II is incorrect
- 3Both Statement I and Statement II are incorrect
- 4Both Statement I and Statement II are correct✓
Correct answer
Both Statement I and Statement II are correct
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