Question

Assertion (A): A commodity which can be put to several uses, is price inelastic.

Reason (R): As price falls, the number of uses of a commodity increases and thereby the number of buyers in the market increases.

Options

• Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Assertion (A) is false, but Reason (R) is true.

Explanation:

Assertion is false because a commodity with multiple alternative uses (like electricity or milk) is highly price elastic, not inelastic, since consumption can easily be expanded or cut back across various uses when price changes. Reason (R) is a true statement that accurately explains the behavioural mechanism behind why such a multi-use commodity has highly elastic demand.