Question

Given below are two statements, one is labelled as Assertion (A) and other one labelled as Reason (R).
Assertion (A): The total expenditure made by a consumer on a normal goods decreases with the increase in its price.
Reason (R): The price elasticity of demand for the goods is elastic ($\varepsilon_d > 1$).
In light of the above statements, choose the most appropriate answer from the options given below.

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A).
• B. Both (A) and (R) are correct but (R) is NOT the correct explanation of (A).
• C. (A) is correct but (R) is not correct.
• D. (A) is not correct but (R) is correct.

Hint:

Remember this relationship for Price ($P$) and Total Expenditure ($TE$):
- Elastic ($\varepsilon_d > 1$): $P \uparrow \implies TE \downarrow$ (Opposite direction)
- Inelastic ($\varepsilon_d < 1$): $P \uparrow \implies TE \uparrow$ (Same direction)
- Unitary ($\varepsilon_d = 1$): $TE$ remains unchanged.

Answer 1

The Correct Option is A