Question : Assertion: Giffen goods violate the law of demand.
Reason: Giffen goods are inferior goods for which the income effect dominates the substitution effect, resulting in an upward-sloping demand curve.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Solution : The correct answer is (a) Option A Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Giffen goods are indeed a type of inferior goods for which the income effect dominates the substitution effect. As a result, when the price of a Giffen good increases, the income effect leads to a decrease in the quantity demanded, while the substitution effect is relatively weak. This combination of effects results in an upward-sloping demand curve, which violates the typical downward-sloping relationship stated by the law of demand.
Question : Assertion (A): The price-demand curve has a downward slope. Reason (R): Inverse relationship between price and demand is stated by the law of demand, holding all other parameters constant.
Question : In which of the following cases does the law of demand fail?
Question : Assertion: The demand curve demonstrates the inverse relationship between a good's own price and the number of units sought. Reason: According to the law of diminishing marginal utility, consuming more units leads to lower consumer satisfaction.
Question : Assertion (A): The demand curve shows the inverse relationship between the own price of a good and its quantity demanded. Reason (R): Law of diminishing marginal utility advocates that consumer gets lesser satisfaction for each additional unit consumed
Question : Assertion: The law of supply states that as the price of good increases, the quantity supplied of that good also increases.
Reason: The law of supply is based on the positive relationship between price and quantity supplied, assuming other factors remain constant.
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