Question : Assertion (A): Cross demand is positive in the case of substitute goods.
Reason (R): A drop in demand for particular product results from a rise in the price of substitute goods.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Assertion (A) is False but Reason (R) is True
Correct Answer: Assertion (A) is true but Reason (R) is False
Solution :
Because demand for one good rise when the price for the substitute good rises, the cross elasticity of demand for substitute goods is always positive.
Hence A is correct but R is false.
So, correct option is "C".
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