Question

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

Assertion (A): Slope of Budget Line is represented by Price Ratio. 

Reason (R): Budget line slopes downwards as more of one good can be bought by decreasing some units of the other good.

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: the price ratio represents the budget line’s slope, and the line slopes downwards because buying more of one good requires giving up some of the other. However, the reason explains the downward slope, not why the slope equals the price ratio. Hence (b) is correct.