Question : Assertion: The demand for essential goods is generally inelastic.

Reason: Essential goods have limited substitutes, and consumers are less price-sensitive in their purchase decisions.

Option 1: Both the assertion and reason are correct and related.

Option 2: Both the assertion and reason are correct but not related.

Option 3: The assertion is correct, but the reason is incorrect.

Option 4: The assertion is incorrect, but the reason is correct.

Correct Answer: Both the assertion and reason are correct and related.

Solution : The correct answer is (A) Both the assertion and reason are correct and related.

The assertion states that the demand for essential goods is generally inelastic. This is generally correct. Essential goods are typically goods that are necessary for basic needs, such as food, housing, healthcare, and utilities. The demand for these goods tends to be less responsive to price changes because they are considered necessities, and consumers have limited alternatives or substitutes available. As a result, consumers are less price-sensitive in their purchase decisions for essential goods, leading to a relatively inelastic demand.

The reason provided states that essential goods have limited substitutes, and consumers are less price-sensitive in their purchase decisions. This reason supports the assertion. Limited substitutes mean that consumers have fewer alternatives to choose from, reducing their ability to switch to other products in response to price changes. Consequently, consumers are less likely to adjust their quantity demanded significantly, making the demand for essential goods more inelastic.

Therefore, both the assertion and reason are correct and related. The demand for essential goods is generally inelastic due to limited substitutes and consumers' reduced price sensitivity, as explained by the reason.