Match List-I with List-II

Choose the correct answer from the options given below:

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

The correct answer is Option (1) → (A)-(II), (B)-(I), (C)-(IV), (D)-(III)

(A) Perfect Competition. →(II) Price taking Behavior. Perfect competition is characterized by numerous buyers and sellers, homogeneous products, perfect information, and free entry and exit. Due to the large number of participants and identical products, no single firm or buyer can influence the market price. They must accept the prevailing market price. 

(B) Increase in Demand = Decrease in Supply → (I) No change in equilibrium price. (Refer to Note below).

(C) Increase in Demand > Decrease in Supply → (IV) Increase in equilibrium price. (Refer to Note below).

(D) Increase in Supply > Decrease in Demand → (III) Decrease in equilibrium price. The net effect is excess supply, which puts downward pressure on price.

Note: The given answer has been retained as per the officially accepted NTA answer key. However, a conceptual ambiguity exists in the matching involving simultaneous changes in demand and supply as explained below:

a. In standard microeconomic analysis, both an increase in demand and a decrease in supply exert upward pressure on equilibrium price. Therefore, students may reasonably argue that in both scenarios (B) and (C), equilibrium price would generally tend to rise in both scenarios. This makes the matching in List-II conceptually debatable if interpreted purely in terms of price.

b. The logic of the table appears more consistent if List-II is interpreted in terms of equilibrium quantity rather than equilibrium price. Under such an interpretation, in scenario (B), equal shifts in demand and supply may offset each other, leading to no change in equilibrium quantity, while in scenario (C), the increase in demand being greater than the decrease in supply may result in an increase in equilibrium quantity.