Question : Assertion (A): Cross demand occurs when the amount of one good is changed because the price of another one has changed. Reason (R): Shifts in consumer spending cause shifts in demand.
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: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Solution : Changes in consumer income lead to a change in demand. Demand is analyzed for cross-elasticity when it changes for reasons other than price. When the price of one of the items varies, the cross elasticity of demand analyses the link between the two. It illustrates how the relative shift in demand for one good changes as the cost of the other increases or decreases. Hence both are separate concepts of another factor so option b is the correct answer.
Question : Assertion: Cross demand occurs when the amount of one good is changed because the price of another one has changed. Reason: Demand changes as a result of changes in consumer income.
Question : Assertion (A): Cross demand is when the quantity of one good is changed because the price of another good has changed. Reason (R): Changes in consumer income leads to a change in demand.
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.
Question : Assertion (A): Demand elasticity is higher for durable commodities. Reason (R): Once durable items are in high demand now, their demand can be delayed.
Question : Assertion (A): Cross demand is positive in the case of substitute goods.
Reason (R): A drop in demand for particular commodity results from an increase in the price of substitute commodities.
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