Assertion Reason: Demand and Elasticity of Demand

1.Assertion (A): Law of demand said that when price increases demand of a commodity decreases, keeping other things constant. Reason (R ): The purchasing capacity of consumer decreases when price of a commodity increases.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

2.Assertion (A): There is inverse relationship between price and demand of a commodity. Reason (R): A demand curve is the graphical representation of the demand schedule showing the relationship between price and demand of a commodity.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is B)

3.Assertion (A): When a person wants to purchase a commodity is known as demand. Reason (R): The demand is basically a desire backed by a purchasing power.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is D)

4.Assertion (A): There is positive income effect in case of normal commodity. Reason (R): When income of consumer increases demand of normal commodity decreases.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is C)

5.Assertion (A): The theory of Giffen goods was propounded by Sir Robert Giffen. Reaason (R): Giffen goods are those goods whose demand falls with the fall in its price.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is B)

6.Assertion (A): Expansion of demand means shift of demand curve to the right. Reason (R): When income of consumers increase demand curve shift to the right.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is D)

7.Assertion (A): Complementary goods are those which are demanded jointly to satisfy a given wants. Reason (R): Tea and sugar is an example of complementary goods.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

8.Assertion (A): If the quantity demanded increases or decreases due to fall or rise in the price of a commodity alone, it is known as movement along a demand curve. Reason (R): The movement is either downward or upward along the same demand curve.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

9.Assertion (A): If more or less quantity of a commodity is demanded, at the same price, due to change in factors other than price of the commodity concerned, it is called shift in demand curve. Reason (R): There is either rightward shift or leftward shift of the demand curve itself.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

10.Assertion (A): If the price of Tea increases demand of Coffee also increases. Reason (R): Tea and coffee are substitute goods.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

11.Assertion (A): If there is rise in the prices of complementary goods, the demand curve shifts to the left. Reason (R): There is direct relationship between price and demand of a complementary good.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is C)

12.Assertion (A): Veblen goods are those goods whose demand increases with increase in price. Reason (R): Goods like salt, medicine etc whose demand is not affected by the change in price.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is B)

13. Assertion (A): Price elasticity of demand is a measure of the degree of responsiveness of the change in demand for a commodity to a change in its price. Reason (R): The degree of responsiveness of the quantity demanded to the change in price may differ and hence elasticity of demand could also differ

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

14.Assertion (A): When demand changes without any change in price, it is known as perfectly elastic demand. Reason (R): When demand does not change although there is change in price, it is known as perfectly inelastic demand.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is B)

15.Assertion (A): elasticity of demand is pure in number and does not depend on the units in which price and demand are measured. Reason (R): This is because elasticity is measured by the rate of two percentages and percentages are always independent of the units of measurement.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

16.Assertion (A): Items like rice, wheat etc are necessaries, therefore elasticity is less. Reason (R): Demand curve of necessities are perfectly elastic.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is C)

17.Assertion (A): When the demand curve is parallel to Y-axis, elasticity of demand will be zero. Reason (R): If a person is habituated of a particular commodity, demand of that commodity is inelastic.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is B)

18.Assertion (A): When demand is unitary elastic then demand curve is rectangular hyperbola. Reason (R): Change in demand due to change in income is called income elasticity of demand.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is B)

19.Assertion (A): When a commodity has large number of substitutes, they have more elastic demand. Reason (R): If price of tea falls people can substitute it with coffee, this tea has elastic demand.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)

20.Assertion (A): If the amount spend on a commodity forms a small proportion of consumer's total expenditure, then demand of that commodity is relatively inelastic. Reason (R): elasticity of demand in case of matchboxes is relatively inelastic as a small amount is spent on that commodity.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.

... Answer is A)