Question

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

Assertion (A): Elasticity of Demand is a unit free measure. 

Reason (R): Price elasticity of demand is not affected by absolute change in demand or 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 not the correct explanation of Assertion (A).

Explanation:

 Both statements are true. Elasticity is unit-free because it compares percentage changes, so it is independent of the units used to measure price and quantity. The Reason is true, but it does not directly explain the unit-free nature of elasticity.