Question

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

Assertion (A): Luxury goods often have high price elasticity of demand.

Reason (R): When price of luxury goods increase, then their demand falls considerably as they are put to urgent uses only.

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 True but Reason (R) is False.

Explanation:

 Luxury goods often have elastic demand because consumers can postpone or reduce their purchases when prices rise. The Reason is false: luxury goods are not put to urgent uses only; rather, their use is generally non-urgent.