Read the following statements - Assertion (A) and Reasoning (R):
Assertion: Price ceiling accompanied by rationing of the goods may have adverse consequences on the consumers.
Reasoning: Standing in long queues and black market creation are some disadvantages of price ceiling.
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 accompanied by rationing of the goods may have adverse consequences on the consumers." This is true. Price ceilings (maximum price limits set by the government) can lead to shortages, forcing consumers to rely on rationing, which often results in inconvenience and inefficiencies.
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Reasoning (R): "Standing in long queues and black market creation are some disadvantages of price ceiling."
This is true. When price ceilings create shortages, consumers may have to wait in long lines to obtain the limited supply. Additionally, black markets often emerge where goods are sold at higher prices illegally to bypass the imposed ceiling.
Since the reasoning directly explains why price ceilings and rationing negatively impact consumers, it is the correct explanation of the assertion.