Question

Assertion (A): Price elasticity of demand is less than one in the case of inelastic demand.

Reason (R): Proportional change in the quantity demanded is less than the proportional change in 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, 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:

Assertion is true because, by definition, inelastic demand means the coefficient of elasticity is less than one (E_d < 1). Reason is also true and provides the exact mathematical explanation, as elasticity becomes less than one precisely when the percentage (or proportional) change in quantity demanded is smaller than the percentage change in price.