Statement: "If demand increases, prices will rise."Assumptions:1️⃣ Demand and price are directly related.2️⃣ Supply will remain constant.Which assumption(s) is/are implicit?

easy Q3 of 15

Reasoning Ability - Statement & Assumption

Statement: "If demand increases, prices will rise."
Assumptions:
1️⃣ Demand and price are directly related.
2️⃣ Supply will remain constant.
Which assumption(s) is/are implicit?

AOnly 1

BBoth 1 and 2

COnly 2

DNeither 1 nor 2

Step-by-Step Solution

Step 1: Identify the economic claim
Prices rising is presented as the effect of increased demand.
Step 2: Test Assumption 1
The basic law that higher demand tends to push prices up is implicit.
Step 3: Test Assumption 2
For demand to directly cause a price rise, supply must be assumed unchanged (ceteris paribus) — implicit.
Final Answer:
Both 1 and 2 are implicit. → Option B
Quick Check:
If supply rose proportionally, price need not rise — so constant supply is assumed ✅

Quick Trick: Economics conditionals usually hide 'all else equal' assumptions like constant supply.

Common Mistakes:

Forgetting hidden ‘ceteris paribus’ conditions.

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More Reasoning Ability Quizzes

Statement: "If demand increases, prices will rise."Assumptions:1️⃣ Demand and price are directly related.2️⃣ Supply will remain constant.Which assumption(s) is/are implicit?

Step 1: Identify the economic claim

Step 2: Test Assumption 1

Step 3: Test Assumption 2

Final Answer:

Quick Check:

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