Question

In the following Question, read the following statement: Assertion (A) and Reason (R). Choose the correct alternative among those given below:

Assertion (A): Budget Line is a narrower concept as compared to Budget Set.

Reason (R): The bundles of budget set lie only on the budget line.

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 and 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 True but Reason (R) is False.

Explanation:

The assertion is true because the budget line includes only bundles costing exactly the consumer’s income, whereas the budget set also includes affordable bundles costing less. The reason is false: budget-set bundles lie on or below the budget line, not only on it. Thus, (c) is correct.