Question

Assertion (A): Under monopolistic competition the consumers have the preference of choosing one product over another.

Reason (R): The sellers can charge a marginally higher price since they may enjoy some market 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 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 factually correct because product differentiation gives consumers unique brand preferences, which grants sellers partial market control to charge a marginally higher price without losing all their customers. However, the reason functions as a consequence of consumer preference rather than the logical cause behind why those preferences exist in the first place.