Question

Assertion (A): Excess demand for a commodity exists when price is less than the equilibrium price.

Reason (R): When market price is less than the equilibrium price, quantity demanded exceeds the quantity supplied.

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, but 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:

Both statements are true. Below the equilibrium price, buyers demand more than sellers supply, so quantity demanded exceeds quantity supplied and excess demand (shortage) arises. The Reason correctly explains the Assertion.