Question

Assertion (A): Households are the owners of factors of production.

Reason (R): They supply factor services to the producers.

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:

• Assertion (A) states that households are the owners of factors of production. This is true, as households own land, labor, capital and other factors used in production.
• Reason (R) states that households supply factor services to the producers. This is also true because households provide these factor services to firms producers and receive income in return.
• The Reason explains why the Assertion is true households own the factors of production and supply the factor services to producers, which is fundamental to production processes.

Hence, both are true and Reason (R) is the correct explanation of Assertion (A).