Assertion (A): The market in which firms sell their products could not function without the households.
Reason (R): The demand for the products of firms comes from the households.
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).
Firms sell their goods to households. Without households’ demand, there would be no buyers, so the market could not work.
Assertion (A): The market in which firms sell their products could not function without the households. — True. Households are the buyers in this market.
Reason (R): The demand for the products of firms comes from the households. — True. Households buy the goods and services firms produce.
Why R explains A? A market needs buyers as well as sellers. The buyers of firms’ products are the households. So without them the firms’ market would have no demand.
NCERT (2026-27): “1.2 Context of the Present Book of Macroeconomics … We must remember that the households consist of people. These people work in firms as workers and earn wages. They are the ones who work in the government departments and earn salaries, or they are the owners of firms and earn profits. Indeed the market in which the firms sell their products could not have been functioning without the demand coming from the households. Moreover, they can also earn rent by leasing land or earn interest by lending capital.” |