Question

a) The price consumption curve is a useful tool of indifference curve analysis
b) If the slope of price consumption curve is negative, the elasticity of demand for the commodity is greater than unity

• A. Both (a) and (b) are true
• B. (a) is true, but (b) is false
• C. (a) is false, but (b) is true
• D. Both (a) and (b) are false

Answer 1

The correct option is A Both (a) and (b) are true

The price consumption curve shows the quantity of goods a consumer is able to purchase when the price of the good changes. Hence, It not only helps in indifference curve analysis but also indicates the elasticity of the goods involved.