Question

Assertion (A): Demand for a commodity with large number of substitutes with be less elastic.

Reason (R): With large number of substitutes, even a small rise in its price will induce the buyers to go for its substitutes.

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 false but Reason (R) is true.

Explanation:

• Assertion (A) is false: The demand for a commodity with many substitutes is more elastic, not less elastic. Consumers can easily switch to a substitute if the commodity's price increases.

• Reason (R) is true: With many substitutes available, even a small rise in the price of the commodity will likely cause buyers to switch to its substitutes, making the demand for the original commodity more elastic.