Question : Assertion (A): Luxury goods often have a high price elasticity of demand. Reason (R): When the price of luxury goods rises, their demand falls significantly because they are only used for urgent purposes.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Assertion (A) is False but Reason (R) is True
Correct Answer: Assertion (A) is true but Reason (R) is False
Solution : Since the proportionate change in the amount requested for luxury goods is greater than the proportionate change in the price of luxury goods, the elasticity of demand for luxury products is greater than one. Hence option c is the correct answer.
Question : Assertion (A): Cross demand is positive in the case of substitute goods. Reason (R): A drop in demand for particular product results from a rise in the price of substitute goods.
Question : Assertion (A): Sir Robert Giffen developed the Giffen goods theory. Reason (R): Giffen goods are those whose demand declines as their price drops.
Question : Assertion (A): Complementary goods are demanded simultaneously to satisfy a particular want. Reason (R): Complementary goods have joint demand
Question : Assertion (A): Demand elasticity is higher for durable commodities. Reason (R): Demand for durable goods can be postponed once they are demanded at present.
Question : Assertion (A): The price-demand curve has a downward slope. Reason (R): Inverse relationship between price and demand is stated by the law of demand, holding all other parameters constant.
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