Question : Assertion: Elasticity of demand measures the responsiveness of quantity demanded to changes in price.
Reason: Elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.
Option 1: Both the assertion and reason are correct and related.
Option 2: Both the assertion and reason are correct but not related.
Option 3: The assertion is correct, but the reason is incorrect.
Option 4: The assertion is incorrect, but the reason is correct.
Correct Answer: Both the assertion and reason are correct and related.
Solution : The correct answer is (A) Both the assertion and reason are correct and related.
The assertion states that elasticity of demand measures the responsiveness of quantity demanded to changes in price. This is true since elasticity of demand is a measure of how sensitive the quantity demanded of a good is to changes in its price.
The reason states that elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. This is also true as elasticity of demand is calculated using the formula: percentage change in quantity demanded divided by the percentage change in price.
Both the assertion and reason are correct and related as they provide accurate statements about the concept of elasticity of demand and how it is calculated.
Question : Assertion: Price elasticity of demand measures the percentage change in quantity demanded given a one percent change in price.
Reason: Price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
Question : Assertion: Cross elasticity of demand measures the responsiveness of quantity demanded of one good to changes in the price of another good.
Reason: Cross elasticity of demand is calculated as the percentage change in quantity demanded of one good divided by the percentage change in the price of another good.
Question : Assertion: When the price of a product increases by 10%, and the quantity demanded decreases by 20%, the price elasticity of demand is 0.5.
Reason: Price elasticity of demand measures the percentage change in quantity demanded divided by the percentage change in price.
Question : Assertion: When the price of a product increases by 10% and its quantity demanded decreases by 10%, the price elasticity of demand is -1.
Question : Assertion: The concept of elasticity of demand is only applicable to individual consumers.
Reason: Elasticity of demand measures the responsiveness of quantity demanded to changes in price.
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