Assertion (A): A point below the budget line cannot be the consumer’s optimum bundle.
Reason (R): For a consumer with monotonic preferences, there is a point on the budget line with more of at least one good and no less of the other.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both (A) and (R) are true and (R) is the correct explanation of (A).
Assertion (A): A point below the budget line cannot be the consumer’s optimum bundle. — True. A bundle below the line costs less than her income, so some money is left unused.
Reason (R): For a consumer with monotonic preferences, there is a point on the budget line with more of at least one good and no less of the other. — True. The unused money can buy more of one good without giving up any of the other.
Why R explains A?
Under monotonic preferences the consumer prefers a bundle with more of at least one good and no less of the other. R shows such a bundle on the budget line always exists. So the point below the line is never her best choice, which is A.
NCERT (2026-27): “2.3 Optimal Choice of the Consumer … The optimum point would be located on the budget line. A point below the budget line cannot be the optimum. Compared to a point below the budget line, there is always some point on the budget line which contains more of at least one of the goods and no less of the other, and is, therefore, preferred by a consumer whose preferences are monotonic. Therefore, if the consumer’s preferences are monotonic, for any point below the budget line, there is some point on the budget line which is preferred by the consumer. …” |