Match List-I with List-IIList-IList-II(A)Upper limit on price of good…

Match List-I with List-II

List-I		List-II
(A)	Upper limit on price of goods & services	(I)	Leads to excess supply.
(B)	Free entry and exit	(II)	Equilibrium price = min AC of the firms.
(C)	Marginal revenue product of labor (MRP_L)	(III)	Leads to excess demand.
(D)	Lower limit on price of goods & services	(IV)	MR × MR_L.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A)-(III), (B)-(II), (C)-(IV), (D)-(I)

(A) and (D) are price limits set by the government, which keep the price away from equilibrium. (B) and (C) are about firms in a perfectly competitive market: how many firms stay in the market, and how many workers each firm hires.

List-I	List-II	Reason
(A) Upper limit on price of goods & services	(III) Leads to excess demand.	An upper limit is a price ceiling, set below the market price. Buyers want more and firms offer less, so demand exceeds supply.
(B) Free entry and exit	(II) Equilibrium price = min AC of the firms.	Above minimum average cost, firms earn extra profit and new firms enter; below it, some firms leave. So the price settles at p = min AC.
(C) Marginal revenue product of labor (MRP_L)	(IV) MR × MR_L.	One more worker adds his marginal product (MP_L), and each unit sold adds marginal revenue (MR). MRP_L = MR × MP_L
(D) Lower limit on price of goods & services	(I) Leads to excess supply.	A lower limit is a price floor, set above the equilibrium price. Firms offer more than buyers take, so supply exceeds demand.

Note: It seems that there is a mistake in the original NTA paper, which prints MR × MR_L in (IV) when it should read MR × MP_L (marginal revenue times marginal product of labour). (C) still matches only (IV), so the answer does not change.

NCERT (2026-27): “Wage Determination in Labour Market … The extra output produced by one more unit of labour is its marginal product (MP_L) and by selling each extra unit of output, the additional earning of the firm is the marginal revenue (MR) she gets from that unit. Therefore, for each extra unit of labour, she gets an additional benefit equal to marginal revenue times marginal product which is called Marginal Revenue Product of Labour (MRP_L). …

and MRP_L = MR × MP_L

5.1.2 Market Equilibrium: Free Entry and Exit … Therefore, at prices greater than the minimum average cost, new firms will enter, and at prices below minimum average cost, existing firms will start exiting. … Therefore, free entry and exit of the firms imply that the market price will always be equal to the minimum average cost, that is

p = min AC

5.2.1 Price Ceiling … The government-imposed upper limit on the price of a good or service is called price ceiling. … When the government imposes price ceiling at p_c which is lower than the equilibrium price level, there will be an excess demand for wheat in the market at that price.

5.2.2 Price Floor … The government-imposed lower limit on the price that may be charged for a particular good or service is called price floor. … But when the government imposes a floor higher than the equilibrium price at p_f, the market demand is q_f whereas the firms want to supply q′_f, thereby leading to an excess supply in the market equal to q_fq′_f.”