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.
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.
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): Change in quantity demanded of one commodity due to a change in the price of another commodity is cross demand. 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.
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