Question

Assertion (A): Suppose that a 2 per cent drop in the price of chocolate causes a 2 per cent increase in quantity demanded. This case is termed unit elasticity.

Reason (R): In this example, Ed is exactly 1 (or unity). E_d = `2/2=1`

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).