Read the following statements - Assertion (A) and Reasoning (R):
Assertion: Price ceiling is set at a price lower than the equilibrium price.
Reasoning: The equilibrium price gets too high because of which poor people cannot afford the commodity.
From the given alternatives choose the correct one:
Answer & explanation
Correct answer: option 2
The correct answer is option 2: Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).
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Assertion (A): "Price ceiling is set at a price lower than the equilibrium price."
- This is true because a price ceiling is a maximum legal price imposed by the government to make essential goods affordable. It is always set below the equilibrium price to prevent prices from rising too high.
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Reasoning (R): "The equilibrium price gets too high because of which poor people cannot afford the commodity."
- This is true because price ceilings are usually implemented for essential goods (such as food, rent, and medicines) when market prices rise too high, making them unaffordable for low-income groups.
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Is Reasoning (R) the correct explanation of Assertion (A)?
- Yes, because the government introduces price ceilings specifically to control high prices that make goods unaffordable for poor consumers. The reason for setting a price ceiling is to ensure accessibility by keeping prices lower than the equilibrium level.