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Correct answer: Statement 1 is true and Statement 2 is false
A transformer core undergoes repeated magnetisation and demagnetisation with the alternating current. The energy dissipated per cycle is proportional to the area of the hysteresis loop, so it must be narrow to minimise heat loss. Soft magnetic materials (like soft iron or silicon steel) have narrow loops, low retentivity, and low coercivity. High retentivity is a property of hard magnetic materials (used for permanent magnets), which is undesirable for transformer cores. Therefore Statement 1 is true and Statement 2 is false.