Given below are two statements: Assertion (A): A price support is a minimum price set by the government for a specified good or service. Reason (R): A price ceiling is a maximum price set by the Government for a specified good or service.

Correct option is B

The correct answer is (B) Both (A) and (R) are correct but (R) is NOT the correct explanation of (A)

Explanation:
• Assertion (A) is correct: A price support (often called a price floor) is a government-mandated minimum price that must be paid for a good. In agriculture, this is often implemented as a Minimum Support Price (MSP) to protect farmer incomes.
• Reason (R) is correct: A price ceiling is a government-imposed maximum price that can be charged for a product. This is usually intended to keep essential goods affordable during shortages or inflation.
• Relationship: While both statements are true definitions of price controls, they describe different mechanisms. Statement (R) defines a 'maximum limit', which does not explain 'why' or 'how' a 'minimum price' (price support) is set. Therefore, (R) is not the logical explanation for (A).

Information Booster:
• Price floors (supports) typically lead to a market surplus (supply > demand) if set above the equilibrium.
• Price ceilings typically lead to market shortages (demand > supply) if set below the equilibrium.
• Rent control is a common example of a price ceiling.

Additional Knowledge:
• Effective Price Support: To be effective, a price support must be set above the market equilibrium price.
• Effective Price Ceiling: To be effective, a price ceiling must be set below the market equilibrium price.