Question

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

Assertion (A): Degree of price elasticity is less than one in case of inelastic demand. 

Reason (R): Proportionate change in demand is less than proportionate change in price.

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

Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).

Explanation:

In inelastic demand, the proportionate change in quantity demanded is less than the proportionate change in price. Therefore, the degree of price elasticity is less than one, and the Reason correctly explains the Assertion.