Question

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

Assertion (A): Cross demand is positive in case of substitute goods. 

Reason (R): An increase in price of substitute good leads to a decrease in demand for given commodity.

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: cross demand is positive for substitutes. The reason is false because a rise in the price of a substitute increases demand for the given commodity, as consumers switch to it.