For the following two statements, choose the ...

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CBSE Class 12 Business Studies 2021 Outside Delhi set 1

Question : 43 of 60

Marks: +1, -0

For the following two statements, choose the correct option:

Statement I: If the demand of a product is inelastic, the firm is in a position to fix higher prices.

Statement II : In case the degree of competition is high, the firm is in position to set high prices.

Choose the correct option from options given below:

Statement I is correct and Statement II is wrong.
Statement II is correct and Statement I is wrong.
Both the statements are correct.
Both the statements are wrong.

Solution:

(a) Statement I is correct and Statement II is wrong.

Statement- I is correct. If the demand of a product is inelastic, the firm is in a position to fix higher prices, as the percentage increase in price will result in a smaller percentage decrease in the quantity demanded.

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