Match the action of a price-taker in List-I with what the price-taker…

Match the action of a price-taker in List-I with what the price-taker believes will happen in List-II:

List-I		List-II
(A)	A firm sets a price above the market price	(I)	No firm will be willing to sell to her
(B)	A firm sets a price equal to the market price	(II)	It will be unable to sell any quantity of the good
(C)	A buyer asks for a price below the market price	(III)	She can obtain as many units of the good as she desires to buy
(D)	A buyer offers a price equal to the market price	(IV)	It can sell as many units of the good as it wants to sell

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A) - (II), (B) - (IV), (C) - (I), (D) - (III)

A price-taker cannot do better than the market price. A seller asking more, or a buyer offering less, gets nothing; at the market price, either can trade as much as wanted.

List-I	List-II	Reason
(A) A firm sets a price above the market price	(II) It will be unable to sell any quantity of the good	Buyers can get the same good from other firms at the market price.
(B) A firm sets a price equal to the market price	(IV) It can sell as many units of the good as it wants to sell	At the market price the firm’s whole output is bought.
(C) A buyer asks for a price below the market price	(I) No firm will be willing to sell to her	Every firm can sell its output at the market price to others.
(D) A buyer offers a price equal to the market price	(III) She can obtain as many units of the good as she desires to buy	Many firms stand ready to sell at that price.

NCERT (2026-27): “4.1 Perfect Competition: Defining Features … A perfectly competitive market has the following defining features:
1. The market consists of a large number of buyers and sellers
2. Each firm produces and sells a homogenous product. i.e., the product of one firm cannot be differentiated from the product of any other firm.
3. Entry into the market as well as exit from the market are free for firms.
4. Information is perfect. … These features result in the single most distinguishing characteristic of perfect competition: price taking behaviour. … A price-taking firm believes that if it sets a price above the market price, it will be unable to sell any quantity of the good that it produces. On the other hand, should the set price be less than or equal to the market price, the firm can sell as many units of the good as it wants to sell.”

“4.1 Perfect Competition: Defining Features … A buyer would obviously like to buy the good at the lowest possible price. However, a price-taking buyer believes that if she asks for a price below the market price, no firm will be willing to sell to her. On the other hand, should the price asked be greater than or equal to the market price, the buyer can obtain as many units of the good as she desires to buy.”