Read the following statements - Assertion (A) and Reason (R):
Assertion: Brokers’ commission on sale and purchase of second hand goods is included in national income.
Reasoning: It is a compensation for rendering productive services.
From the given alternatives choose the correct one:
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Assertion: Brokers’ commission on sale and purchase of second hand goods is included in national income. This is correct. While the sale of the good itself isn't new production (it's a transfer of ownership), the broker's service in facilitating the transaction is considered new production. Their work adds value by bringing buyers and sellers together.
Reasoning: It is a compensation for rendering productive services. This is also correct. Brokers earn their commission by facilitating transactions between buyers and sellers, which is considered a productive service.
Reason (R) explains Assertion (A) because it provides a logical justification for why brokers’ commission on the sale and purchase of second-hand goods is included in national income.