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Question

Economics Question on Logarithmic Differentiation

Given below are two statements, one is labelled as Assertion (A) and the other is labelled as Reason (R):
Assertion (A) : For a differential equation x + ax = b for a≠0 , F(x)=x=b-ax and the equilibrium is at x=ba\text{x}=\frac{b}{a}. This a equilibrium is stable for a > 0. Reason (R) : The equilibrium is obtained for x=b-ax=0 or x=ba\text{x}=\frac{b}{a}. Stability is obtained when F'(x) is <0. Here F'(x) = -a and so the equilibrium is stable if a> 0.
In the light of the above statements, choose the correct answer from the options given below:

A

Both (A) and (R) are true and (R) is the correct explanation of (A)

B

Both (A) and (R) are true but (R) is not the correct explanation of (A)

C

(A) is true but (R) is false

D

(A) is false but (R) is true

Answer

Both (A) and (R) are true and (R) is the correct explanation of (A)

Explanation

Solution

The correct answer is (A) : Both (A) and (R) are true and (R) is the correct explanation of (A)