Question

Assertion (A): Elasticity of demand is less for higher level income groups.


Reason (R): Rich people are influenced by change in the price of the commodity.

Alternatives:


a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).


b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).


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


d) Assertion (A) is false, but Reason (R) is true. ​

Answer 1

Answer:

B is your right answer to

Answer 2

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

• The assertion says that the elasticity of demand is low for the higher income groups because they are not influenced by the change in the price of the commodity. Thus, the reason(R) stated in the question is fae.
• The formula for income elasticity of demand is the percentage change in quantity demanded divided by percentage change in the income.
• The higher income classes can even buy the commodity at a higher price and hence the elasticity of demand for them is much lower than the lowe- income class who cannot afford the commodity at higher prices.