Choose correct pair.
| Column A | Column B |
| A. Rationing | 1. Price Ceiling |
| B. Buffer Stock | 2. Price ceiling |
| C. Rationing | 3. Price Floor |
| D. buffer Stock | 4. Excess demand |
Answer & explanation
Correct answer: option 1
The correct answer is option 1: A-1
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Rationing - Price Ceiling: This is correct because when the government imposes a price ceiling (a maximum price limit), it can lead to shortages. To manage these shortages, the government implements rationing to ensure fair distribution of goods among consumers.
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Buffer Stock - Price Ceiling: This is incorrect because buffer stock is a policy used to stabilize prices by storing excess supply and releasing it during shortages. It is associated with price floors, not price ceilings.
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Rationing - Price Floor: This is incorrect because rationing is generally linked to price ceilings, not price floors. Price floors (minimum price limits) usually lead to surpluses, not shortages.
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Buffer Stock - Excess Demand: This is incorrect because buffer stock is used to manage excess supply, not excess demand.