Question :
Assertion (A): There is no clear cut demarcation between capital and consumer goods.
Reason (R): It depends upon the ultimate use of the good.
Option 1: Both A and R are true and R is the correct explanation of A.
Option 2: Both A and R are true, but R is not the correct explanation of A.
Option 3: A is true, but R is false.
Option 4: A is false, but R is true.
Answer (1)
Correct Answer: Both A and R are true and R is the correct explanation of A.
Solution :
There is no clear cut line of demarcation between consumption goods and capital goods. Same good can be a consumption goods and also a capital goods depending upon its ultimate use of the commodity.
For example- A machine purchased by a household for own consumption will be treated as a consumption goods and if the same machine is purchased by a firm to carry out his business activities at it as a capital goods.
Hence, Option A is correct.
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