1) Assertion (A): General equilibrium deals with the
behaviour of individual price of commodity.
Reasoning(R): Lumping method is the study of aggregates.
1) (A) is true but (R) is false.
2) (A) is false but (R) is true.
3) Both (A) and (R) are true and (R) is the correct explanation
of (A).
4) Both (A) and (R) are true and (R) is not the correct
explanation of (A).
Answers
Answer:
Answer. A
Explanation:
lumping is the study of indepth
Answer:
(A) is true but (R) is false.
Explanation:
Where, D = demand curve, S = supply curve, P = price of commodity, Q = quantity demanded and supplied, P0 = equilibrium price, A = excess demand, B = excess supply.
when the price of a commodity is above equilibrium price then the supply will be more than demand and when the price of a commodity is below equilibrium price then the demand will be more than supply.
These both are disequilibrium prices of a commodity.
The equilibrium price of a commodity is the price at which the quantity demanded of the commodity equals the quantity supplied i.e. P0.
In the absence of external influences, the price of a commodity will not change.
Equilibrium is a state in which market supply and demand balance each other and as a result, price becomes stable.
Equilibrium is the condition, once determined tends to persist in time only when the behavior of agents is consistent, a dynamic process governs equilibrium outcome, and there is no incentive for agents to change behavior.
LUMPING METHOD:
The lumping method is a method of economic analysis used in macroeconomics to study the economy as a whole. In this method, economic units are lumped together and studied, for example, national income, aggregate demand etc. Thus, individual units are ignored.
Macroeconomics uses the lumping method. That is, it splits up the entire economy into big lumps (sectors) and then studies aggregate measures such as aggregate demand, aggregate supply and aggregate price level.
so,(A) is true but (R) is false.