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Question
Assertion (A): Demand for a commodity with large number of substitutes with be less elastic.
Reason (R): With large number of substitutes, even a small rise in its price will induce the buyers to go for its substitutes.
Options
Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A) .
Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true but Reason (R) is false.
Assertion (A) is false but Reason (R) is true.
Solution
Assertion (A) is false but Reason (R) is true.
Explanation:
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Assertion (A) is false: The demand for a commodity with many substitutes is more elastic, not less elastic. Consumers can easily switch to a substitute if the commodity's price increases.
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Reason (R) is true: With many substitutes available, even a small rise in the price of the commodity will likely cause buyers to switch to its substitutes, making the demand for the original commodity more elastic.
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