Match List-I with List-II
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List-I |
List-II |
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(A) Increase in demand > Increase in Supply |
(I) Increase in both equilibrium price and quantity. |
|
(B) Increase in demand < Increase in Supply |
(II) Decrease in both equilibrium price and quantity. |
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(C) Increase in demand = Increase in Supply |
(III) Decrease in equilibrium price but increase in equilibrium quantity. |
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(D) Decrease in demand < Decrease in supply |
(IV) Increase in equilibrium quantity but no change in equilibrium price. |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A)-(I), (B)-(III), (C)-(IV), (D)-(II)
|
List-I |
List-II |
|
(A) Increase in demand > Increase in Supply |
(I) Increase in both equilibrium price and quantity. |
|
(B) Increase in demand < Increase in Supply |
(III) Decrease in equilibrium price but increase in equilibrium quantity. |
|
(C) Increase in demand = Increase in Supply |
(IV) Increase in equilibrium quantity but no change in equilibrium price. |
|
(D) Decrease in demand < Decrease in supply |
(II) Decrease in both equilibrium price and quantity. |
- (A) Increase in demand > Increase in supply: Demand rises more than supply, so both equilibrium price and quantity increase. Hence, (A) → (I)
- (B) Increase in demand < Increase in supply. Supply rises more than demand, causing equilibrium price to fall while equilibrium quantity increases. Hence, (B) → (III)
- (C) Increase in demand = Increase in supply. Equilibrium quantity increases but price remains unchanged. Hence, (C) → (IV)
- (D) Decrease in demand < Decrease in supply. Supply decreases more than demand, leading to a decrease in equilibrium quantity. Hence, (D) → (II)
Note: In case (D) → “Decrease in demand < Decrease in supply,” the decrease in supply is greater than the decrease in demand. In such a situation, equilibrium quantity decreases, while equilibrium price generally tends to rise. Therefore, List-II option (II) → “Decrease in both equilibrium price and quantity” may appear conceptually inconsistent to students. Hence, there is some ambiguity in the wording/matching provided in the question regarding the price effect.