Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Market Equilibrium

Question:

Arrange the following in correct sequence, to correct the problem of mismatch between supply and demand forces:

(A) There is excess demand in the market.
(B) All other things remain the same as price rises, quantity demanded falls and quantity supplied increases.
(C) 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 the prevailing prices.
(D) The market moves towards the point where the quantity that the firms want to sell is equal to the quantity that the consumers want to buy.

Choose the correct answer from the options given below:

Options:

(A), (B), (C), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer:

(A), (C), (B), (D)

Explanation:

The correct answer is Option (2) → (A), (C), (B), (D)

  • (A) There is excess demand in the market. (This is the starting problem/disequilibrium: quantity demanded > quantity supplied at the current price).

  • (C) 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 the prevailing prices. (This willingness to pay more, or competition among buyers for the scarce good, creates upward pressure on the price).

  • (B) All other things remain the same as price rises, quantity demanded falls and quantity supplied increases. (The rising price acts as the mechanism: the higher price rations demand (causes contraction of demand) and incentivizes producers to make more (causes expansion of supply)).

  • (D) The market moves towards the point where the quantity that the firms want to sell is equal to the quantity that the consumers want to buy. (This is the result: the movement described in (B) continues until the market reaches a new equilibrium, correcting the mismatch).