Given below are 2 sets of statements in column I and column II. Match the statements in different columns (column 1 and 2) to make a correct pair.
Column I
i. Price floor
ii. Simultaneous right shift in demand and supply
iii. Price ceiling
iv. Equilibrium when free entry and exit
Column II
a) Necessities like medicine
b) Wage legislation
c) Unambiguous effect on quantity
d) Price = Minimum Average Cost
Alternatives:

i-b, ii-c, iii-a, iv-d

The correct answer is option 1: i-b, ii-c, iii-a, iv-d

• i. Price floor → b) Wage legislation ✅

  • A price floor is a minimum price set above equilibrium, ensuring prices do not fall below a certain level.
  • Example: Minimum wage laws, where the government ensures workers receive at least a set minimum wage.

• ii. Simultaneous right shift in demand and supply → c) Unambiguous effect on quantity ✅

  • When both demand and supply increase (shift right), the quantity definitely increases, but the effect on price is uncertain.

• iii. Price ceiling → a) Necessities like medicine ✅

  • A price ceiling is a maximum price set below equilibrium to make essential goods affordable.
  • Example: Government-imposed price caps on medicines to ensure affordability for the public.

• iv. Equilibrium when free entry and exit → d) Price = Minimum Average Cost ✅

  • In a perfectly competitive market with free entry and exit, firms operate at the minimum average cost, earning only normal profit in the long run.