Match List-I (situations in fixing the price of a product) with List-…

Match List-I (situations in fixing the price of a product) with List-II (factors affecting price determination):

List-I	List-II
(A) The price must cover what the firm spends on making, distributing and selling the product, at least in the long run.	(I) Marketing methods used
(B) The highest price a buyer is prepared to pay depends on the benefit he expects and how strongly he wants the product.	(II) Extent of competition in the market
(C) A firm that offers free home delivery has some flexibility in fixing the price of its product.	(III) Product cost
(D) Where the price settles between its lower and upper limits depends on how strong the rivalry among sellers is.	(IV) Utility and demand

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A)-(III), (B)-(IV), (C)-(I), (D)-(II)

List-I	List-II	Reason
(A) The price must cover what the firm spends on making, distributing and selling the product, at least in the long run.	(III) Product cost	The cost of producing, distributing and selling sets the floor price. In the long run a firm cannot survive unless all its costs are covered.
(B) The highest price a buyer is prepared to pay depends on the benefit he expects and how strongly he wants the product.	(IV) Utility and demand	The utility of the product and the intensity of the buyer’s demand set the upper limit of price.
(C) A firm that offers free home delivery has some flexibility in fixing the price of its product.	(I) Marketing methods used	Home delivery is part of the marketing methods a firm uses. Such services give it some freedom in fixing its price.
(D) Where the price settles between its lower and upper limits depends on how strong the rivalry among sellers is.	(II) Extent of competition in the market	The degree of competition decides where the price settles. Less competition pushes it to the upper limit; free competition pulls it to the lowest level.

NCERT (2026-27 Edition): “1. Product cost: One of the most important factor affecting price of a product or service is its cost. This includes the cost of producing, distributing and selling the product. The cost sets the minimum level or the floor price at which the product may be sold. …”

“2. The Utility and Demand: While the product costs set the lower limits of the price, the utility provided by the product and the intensity of demand of the buyer sets the upper limit of price, which a buyer would be prepared to pay. …”

“3. Extent of Competition in the Market: Between the lower limit and the upper limit where would the price settle down? This is affected by the nature and the degree of competition. …”

“6. Marketing Methods Used: Price fixation process is also affected by other elements of marketing such as distribution system, quality of salesmen employed, quality and amount of advertising, sales promotion efforts, the type of packaging, product differentiation, credit facility and customer services provided. For example, if a company provides free home delivery, it has some of flexibility in fixing prices. …”