Which of the following pairs is correctly matched?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Excess demand – Some buyers are willing to pay more than the prevailing price

Excess demand means buyers want more than sellers offer at that price. Buyers who go without bid the price up.

Option (1) Excess supply – The price tends to rise — Incorrect. With excess supply, firms cannot sell all they want, so they lower the price.

Option (2) Zero excess demand and zero excess supply – The price tends to fall over time — Incorrect. Zero excess demand and zero excess supply is equilibrium. The market clears, so the price has no reason to change.

Option (3) Excess demand – Some buyers are willing to pay more than the prevailing price — Correct. Buyers who get none or too little are willing to pay more, so the price tends to rise.

Option (4) Price above the equilibrium price – Excess demand in the market — Incorrect. Above the equilibrium price, supply is more than demand, so there is excess supply.

NCERT (2026-27): “5.1 Equilibrium, Excess Demand, Excess Supply … If at a price, market supply is greater than market demand, we say that there is an excess supply in the market at that price and if market demand exceeds market supply at a price, it is said that excess demand exists in the market at that price. Therefore, equilibrium in a perfectly competitive market can be defined alternatively as zero excess demand-zero excess supply situation.”

“5.1.1 Market Equilibrium: Fixed Number of Firms … Some consumers who are either unable to obtain the commodity at all or obtain it in insufficient quantity will be willing to pay more than p1. The market price would tend to increase. … Some firms will not be then able to sell quantity they want to sell; so, they will lower their price.”