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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.
Reason (R): Excess capacity arises because of excess supply.
- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'C'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A...
Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.
Reason (R): Excess capacity arises because of excess supply.
The correct answer is option 'C', which states that Assertion (A) is true, but Reason (R) is false.
Explanation:
- Aggregate Supply (AS) refers to the total amount of goods and services that firms in an economy are willing and able to produce at a given price level. It is influenced by various factors such as available resources, technology, and production capacity.
- Aggregate Demand (AD) refers to the total amount of goods and services that households, businesses, and the government are willing and able to purchase at a given price level.
- The relationship between AD and AS is crucial in determining the overall level of economic activity in an economy.
- When there is excess capacity in the economy, it means that firms have idle resources and can increase their production without facing any bottlenecks or constraints.
- In such a situation, an increase in AD would lead to an increase in production as firms have the capacity to meet the additional demand.
- Therefore, Assertion (A) is true. AS increases proportionate to the increase in AD as long as there is excess capacity in the economy.
However, the Reason (R) provided is incorrect. Excess capacity does not arise because of excess supply. Instead, it arises when the actual level of production falls short of the potential level of production that can be achieved with the available resources and technology.
- Excess supply, on the other hand, refers to a situation where the quantity supplied of a good or service exceeds the quantity demanded at a given price level.
- Excess supply can lead to a decrease in production and a reduction in AS, as firms may reduce their output to match the lower demand.
- Therefore, Reason (R) is false.
In conclusion, while Assertion (A) is true, Reason (R) is false. The correct answer is option 'C'.
Reason (R): Excess capacity arises because of excess supply.
The correct answer is option 'C', which states that Assertion (A) is true, but Reason (R) is false.
Explanation:
- Aggregate Supply (AS) refers to the total amount of goods and services that firms in an economy are willing and able to produce at a given price level. It is influenced by various factors such as available resources, technology, and production capacity.
- Aggregate Demand (AD) refers to the total amount of goods and services that households, businesses, and the government are willing and able to purchase at a given price level.
- The relationship between AD and AS is crucial in determining the overall level of economic activity in an economy.
- When there is excess capacity in the economy, it means that firms have idle resources and can increase their production without facing any bottlenecks or constraints.
- In such a situation, an increase in AD would lead to an increase in production as firms have the capacity to meet the additional demand.
- Therefore, Assertion (A) is true. AS increases proportionate to the increase in AD as long as there is excess capacity in the economy.
However, the Reason (R) provided is incorrect. Excess capacity does not arise because of excess supply. Instead, it arises when the actual level of production falls short of the potential level of production that can be achieved with the available resources and technology.
- Excess supply, on the other hand, refers to a situation where the quantity supplied of a good or service exceeds the quantity demanded at a given price level.
- Excess supply can lead to a decrease in production and a reduction in AS, as firms may reduce their output to match the lower demand.
- Therefore, Reason (R) is false.
In conclusion, while Assertion (A) is true, Reason (R) is false. The correct answer is option 'C'.
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Directions : In the following questions, a statement of Assertion (A...
Excess capacity arises because of deficiency of demand.
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer?.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer?.
Solutions for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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