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Question
Assertion (A): The demand for soap, salt, matches etc. is highly elastic.
Reason (R): The demand for soap, salt, matches etc. is highly inelastic because the consumer spends a very small amount of expenditure in relation to his/her income.
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.
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Solution
Assertion (A) is false but Reason (R) is true.
Explanation:
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Assertion (A) is false: The demand for soap, salt, matches, etc., is not highly elastic; it is highly inelastic. This means price changes have little effect on the quantity demanded because these are essential, everyday items.
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Reason (R) is true: The demand for these items is highly inelastic because they account for a very small portion of a consumer's income. Because they are necessities, consumers will continue to purchase them even if prices change.
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