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.
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 :
Cross elasticity of demand assesses how two goods are related when one of their prices varies. It illustrates how the relative shift in demand for one good changes as the cost of the other increases or decreases.
Change in other factors means a change in demand.
Change in income may be the cause of change in demand.
Hence both are different other factors so both are true but reason does not explain assertions.
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