For the following two statements of Assertion (A) and Reasoning (R) indicate the correct code : Assertion (A) : Gossen’s first law of consumption is invariably applicable in case of individuals’ consumption behaviour. Reasoning (R) : It serves as an important determinant of demand for the goods and services in the market. Codes :
Assertion (A) Analysis
Gossen’s First Law, also known as the Law of Diminishing Marginal Utility, states that the additional satisfaction (marginal utility) a consumer derives from consuming successive units of a good decreases.
The assertion claims this law is invariably applicable to individual consumption. While the law is a fundamental principle and widely applicable, the term 'invariably' suggests absolute, exceptionless consistency. In economics, absolute statements are often difficult to maintain, as exceptions or specific conditions might exist (e.g., addictive goods). Thus, Assertion (A) is considered incorrect due to this strict qualification.
Reasoning (R) Analysis
The Law of Diminishing Marginal Utility is a cornerstone of demand theory. It explains why consumers are willing to purchase more units of a good only at a lower price.
As marginal utility falls with increased consumption, the consumer's willingness to pay for additional units decreases. This principle directly underlies the downward-sloping demand curve and is a key factor influencing overall market demand for goods and services. Therefore, Reasoning (R) is correct.
Conclusion
Based on the analysis:
- Assertion (A) is incorrect because the law is not strictly 'invariable' in all circumstances.
- Reasoning (R) is correct as the law is a fundamental determinant of market demand.
This corresponds to the code where Assertion is incorrect and Reasoning is correct.
Important Questions from Utility analysis
Utility derived from consumption of an additional unit of a good is called
Which of the following statements is true?
The word ‘marginal’ means _____.
The law of diminishing marginal utility was propagated by:
- Ordinal utility analysis of the consumer's behaviour is considered superior to the cardinal utility analysis mainly due to
