[amp_mcq option1=”Both (A) and (R) are true” option2=”(A) is true, but (R) is false” option3=”(A) is false, but (R) is true” option4=”Both (A) and (R) are false” correct=”option1″]<\/p>\n
The correct answer is: A. Both (A) and (R) are true<\/strong><\/p>\n Assertion (A) is true because of the law of demand, which states that, all other things being equal, the quantity demanded of a good or service will decrease as the price of that good or service increases.<\/p>\n Reason (R) is also true because the price effect is the net result of the positive substitution effect and negative income effect. The substitution effect occurs when a consumer substitutes a good that has become relatively cheaper for a good that has become relatively more expensive. The income effect occurs when a change in the price of a good causes a change in the consumer’s real income.<\/p>\n Here is a more detailed explanation of each option:<\/p>\n [amp_mcq option1=”Both (A) and (R) are true” option2=”(A) is true, but (R) is false” option3=”(A) is false, but (R) is true” option4=”Both (A) and (R) are false” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-57468","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n\n