Question

Assertion (A): Price elasticity of demand is a measure of the degree of responsiveness of the demand for good to changes in its price.

Reason (R): Price elasticity of demand is defined as the percentage change in demand for the good divided by percentage change in its 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 the correct explanation of Assertion (A).

Explanation:

Price elasticity of demand measures how strongly consumer demand responds to fluctuations in market pricing. This level of responsiveness is measured quantitatively by dividing the percentage change in quantity sought by the percentage change in price. This mathematical formula serves as the precise definition and mechanism for computing the exact responsiveness indicated in the assertion, making it the ideal logical explanation.