Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Read the following statements - Assertion (A) and Reasoning (R):
Assertion: Equation of a budget line is: 10A+20B=50. Slope of line is 0.3.
Reasoning: Slope of the budget line is price of good A divided by price of good B.
From the given alternatives choose the correct one:

Options:

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is not the correct explanation of Assertion (A).

Assertion (A) is true but Reasoning (R) is false.

Assertion (A) is false but Reasoning (R) is true.

Correct Answer:

Assertion (A) is false but Reasoning (R) is true.

Explanation:

Slope of budget line is\(\frac{ P(A)}{ P(B)}\), that is, price of good A divided by price of good B. Here, price of A is 10 and price of B is 20. Hence slope of budget line is \(\frac{ P(A)}{ P(B)}\)= \(\frac{10 }{ 20}\)= 0.5