The statement is: "Gold demand has fallen in the first half due to rising prices and the trend is likely to continue in the second half." Based on this statement, which of the following conclusions is logically justified?

Introduction / Context:
This question tests interpretation of a short economic statement. We are told that gold demand has fallen because of rising prices and that the same pattern is likely to continue. The conclusions focus on the sensitivity of customers to price and on certainty about future demand. We must decide which conclusion is directly supported by the information and which one goes beyond what is stated.

Given Data / Assumptions:

• Gold demand has fallen in the first half of the period under consideration.
• The fall in demand is explicitly attributed to rising prices.
• The trend is likely to continue in the second half.
• The term likely expresses a strong expectation, but not absolute certainty.

Concept / Approach:
From an economics perspective, when demand falls as price rises, it indicates that consumers react to higher prices by reducing their purchases. This behaviour is described as price sensitivity or price elasticity of demand. However, words like likely refer to probability rather than guarantee. So we can conclude that price is an important factor influencing demand, but we cannot conclude with certainty that demand will not improve under any circumstances in the second half.

Step-by-Step Solution:
Step 1: The statement clearly connects falling gold demand in the first half to rising prices. That is a direct cause and effect link implied by the phrase due to rising prices.Step 2: If a rise in price leads to a fall in demand, customers are responding to price changes. This is the essence of price sensitivity.Step 3: Therefore, it is reasonable and logically justified to conclude that customers are sensitive to changes in gold prices.Step 4: Now examine the second conclusion that there will be no improvement in demand in the second half. The original statement only says the trend is likely to continue, not that it is guaranteed under all conditions.Step 5: The phrase likely leaves open the possibility that demand improves due to other factors such as income changes, festivals or changes in investor sentiment.Step 6: Thus, the statement does not justify a categorical prediction that there will be absolutely no improvement in demand in the second half.

Verification / Alternative check:
If prices were to stabilise or fall in the second half, demand might recover. The original statement does not rule out such a scenario.However, as long as high prices persist, the earlier behaviour suggests that demand will tend to remain weak, which supports the idea of price sensitivity.This reasoning shows that only the first conclusion accurately reflects the information.

Why Other Options Are Wrong:
Option b treats likely as equivalent to guaranteed and therefore overstates the certainty about future demand.Option c claims neither conclusion is justified, but we have clear cause and effect linking price changes and demand.Option d says both conclusions are true, which is incorrect for the second conclusion.Option e conflicts with the statement because price is explicitly identified as the cause of falling demand.

Common Pitfalls:
Ignoring the phrase due to rising prices and missing the direct connection between price and demand.Misinterpreting the word likely as a guarantee about what will happen in the second half.Assuming that a single explanation in the statement covers all future possibilities and then drawing overly strong conclusions.

Final Answer:
The only conclusion that is fully supported by the statement is that Customers are very price sensitive with respect to gold.