Question

Match List-I with List-II:

List-I	List-II
(A) Consumer equilibrium	(I) MRS = Ratio of prices
(B) Necessity goods	(II) Unit elastic demand
(C) Total expenditure decreases with increase in price of the good	(III) Inelastic demand
(D) Rectangular hyperbola demand curve	(IV) Elastic demand

Choose the correct answer from the options given below :

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

Answer 1

The Correct Option is B

To appropriately match the items from List-I with List-II, we need to understand each concept: 

• Consumer equilibrium (A) is achieved when a consumer maximizes their satisfaction with their income. This occurs when the Marginal Rate of Substitution (MRS) equals the ratio of prices of the goods, thus matching with (I) MRS = Ratio of prices.
• Necessity goods (B) refer to goods for which demand remains relatively constant despite changes in price. This corresponds to (III) Inelastic demand as the quantity demanded does not change significantly with price changes.
• Total expenditure decreases with an increase in price (C) describes a situation where the percentage change in price is smaller than the percentage change in quantity demanded, which is associated with (IV) Elastic demand.
• A Rectangular hyperbola demand curve (D) signifies a scenario where total expenditure remains constant irrespective of price changes, linking it to (II) Unit elastic demand.

Thus, the correct matching of List-I with List-II is: (A)-(I), (B)-(III), (C)-(IV), (D)-(II)

Answer 2

In order to solve the problem of matching List-I with List-II based on the options provided, let's analyze each pair: (A) Consumer equilibrium is achieved when the Marginal Rate of Substitution (MRS) between two goods equals the ratio of their prices, so (A) corresponds with (I). (B) Necessity goods are characterized by inelastic demand because consumers continue to buy them even as prices rise, so (B) matches with (III). (C) When total expenditure decreases with an increase in price, this indicates that demand is elastic, as the percentage change in quantity demanded is greater than the percentage change in price, therefore (C) links with (IV). Finally, (D) A rectangular hyperbola demand curve represents unit elastic demand, where any change in price leads to an exactly proportionate change in quantity demanded, maintaining total revenue constant, so (D) aligns with (II).

Thus, the correct answer is: (A)-(I), (B)-(III), (C)-(IV), (D)-(II)