Match List-I with List-II List-

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Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Market Equilibrium

Question:

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)	(III) Leads to excess demand.
(D) Lower limit on price of goods & services	(IV) MR × $MP_L$.

Choose the correct answer from the options given below:

Options:

(A)-(I), (B)-(II), (C)-(III), (D)-(IV)

(A)-(III), (B)-(II), (C)-(IV), (D)-(I)

(A)-(IV), (B)-(III), (C)-(II), (D)-(I)

(A)-(IV), (B)-(III), (C)-(I), (D)-(II)

Correct Answer:

(A)-(III), (B)-(II), (C)-(IV), (D)-(I)

Explanation:

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

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

(A) Upper limit on price of goods & services matches with (III) Leads to excess demand. A price ceiling set below the market equilibrium price prevents the price from rising, causing a shortage where the quantity demanded exceeds the quantity supplied.
(B) Free entry and exit matches with (II) Equilibrium price = min AC of the firms. In the long run under perfect competition, free entry and exit of firms ensure that economic profits are driven to zero, which occurs where the market price equals the minimum point of the average cost curve.
(C) Marginal revenue product of labor (MRP) matches with (IV) $MR \times_{$MP_L}$ . The Marginal Revenue Product is the additional revenue a firm earns from employing one more unit of labor. This is calculated by multiplying the marginal revenue (MR) by the marginal product of labor ( $M P_{L}$ ).
(D) Lower limit on price of goods & services matches with (I) Leads to excess supply. A price floor set above the market equilibrium price prevents the price from falling, causing a surplus where the quantity supplied exceeds the quantity demanded.