Question

Match List-I with List-II:

List-I (Characteristic)		List-II (Implication)
A	Equilibrium	(I)	Plans of all the consumers and firms in the market match
B	Excess supply	(II)	Demand decreases with an increase in income
C	Inferior good	(III)	Supply is greater than market demand
D	Price ceiling	(IV)	Imposition of upper limit by government

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

Answer 1

The Correct Option is B

Equilibrium occurs when all market plans match, excess supply means supply exceeds demand, and price ceilings are government-imposed upper limits.

Answer 2

Equilibrium in a market occurs when the plans of all economic agents—buyers and sellers—align, meaning that the quantity demanded by consumers is equal to the quantity supplied by producers at a specific price. At this point, there is no pressure for the price to change, as the market is balanced.

When there is excess supply, it means that the quantity of goods available exceeds the quantity demanded at the prevailing price. This typically occurs when the price is too high, leading to unsold goods. Producers may lower prices to stimulate demand and return to equilibrium. Excess supply is often referred to as a surplus.

On the other hand, price ceilings are government-imposed upper limits on the price of a good or service, aimed at making goods more affordable for consumers. For example, rent controls are a common form of price ceiling. While price ceilings can prevent prices from rising too high, they may also lead to shortages, as producers may be unwilling to supply enough goods at the artificially low price, resulting in unmet demand.