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

To solve this matching question correctly, we need to align the characteristics from List-I with their implications in List-II. Let's analyze each characteristic and match it with the appropriate implication: 

• Equilibrium: This is a state where the market demand and supply are balanced, meaning the plans of all consumers and firms in the market match. Thus, Equilibrium matches with (I) Plans of all the consumers and firms in the market match.
• Excess supply: This occurs when the quantity supplied is greater than the quantity demanded in the market. Hence, it matches with (III) Supply is greater than market demand.
• Inferior good: An inferior good is a type of good for which demand decreases as income increases. Therefore, it matches with (II) Demand decreases with an increase in income.
• Price ceiling: This is a government-imposed limit on how high a price can be charged on a product. Thus, it matches with (IV) Imposition of upper limit by government.

Based on the analysis, the correct matches are: (A) - (I), (B) - (III), (C) - (II), (D) - (IV).

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.