Question

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

Assertion (A): Price Elasticity is infinity in case of horizontal straight line demand curve. 

Reason (R): Demand is more elastic in case of long period as compared to short period.

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. A horizontal straight-line demand curve represents perfectly elastic demand, so price elasticity is infinite. Demand is also generally more elastic in the long period, but this does not explain why elasticity is infinite for a horizontal demand curve.