Read the following statements - Assertion (A) and Reasoning (R):
Assertion: If there is excess demand in the market at price p1, the market price will decrease.
Reasoning: Some consumers who are either unable to obtain the commodity at all or obtain it in insufficient quantity will be willing to pay more than p1.
Answer & explanation
Correct answer: option 4
The correct answer is Option 4: Assertion (A) is false but Reasoning (R) is true.
Understanding Excess Demand:
- Excess demand occurs when the quantity demanded is greater than the quantity supplied at a given price (p1).
- In such a situation, consumers compete to buy the product, which drives the price up, not down.
Analyzing the Statements:
-
Assertion (A): "If there is excess demand in the market at price p1, the market price will decrease."
- ❌ False, because when there is excess demand, the price will increase, not decrease.
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Reasoning (R): "Some consumers who are either unable to obtain the commodity at all or obtain it in insufficient quantity will be willing to pay more than p1."
- ✅ True, because when demand exceeds supply, some consumers are willing to pay a higher price to secure the good.