Question : Assertion: In the case of a horizontal straight-line demand curve, price elasticity is infinite.
Reason: Demand is more elastic in case of a long period as compared to a short period.
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:
Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
Solution :
In the case of a horizontal straight-line demand curve, price elasticity is infinite. Demand is more elastic over a long period than over a short period.
Price elasticity of demand is typically lower in the short run when consumers have less time to react than in the long run when they have more opportunities to find substitute goods. As a result, long-run demand is more price elastic than short-run demand.
Both are different from each other but these are correct.
Hence option b is the correct answer.
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