Question

Assertion (A): Utility and Demand affect the price of a product.

Reason (R): Utility provided by the product and the intensity of demand of the buyer set the upper limit of 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 the correct explanation of Assertion (A).

Explanation:

Utility and demand determine how much a buyer is willing to pay for a product, thereby affecting its price.

This directly explains why the utility and intensity of demand set the upper price limit!