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.

Answer 1

Assertion (A) is false but Reason (R) is true.

Explanation:

• 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.

• 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.