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 correctly match items from List-I with List-II, understanding each concept is essential:

• Consumer equilibrium (A) is attained when a consumer achieves maximum satisfaction within their income constraints. This condition is met when the Marginal Rate of Substitution (MRS) is equal to the ratio of the prices of the goods, thus aligning with (I) MRS = Ratio of prices.
• Necessity goods (B) are defined as goods whose demand shows little fluctuation in response to price changes. This characteristic is equivalent to (III) Inelastic demand, indicating that the quantity demanded does not vary substantially with price variations.
• Total expenditure decreases with an increase in price (C) describes a situation where the percentage change in price is less than the percentage change in quantity demanded, which is associated with (IV) Elastic demand.
• A Rectangular hyperbola demand curve (D) represents a situation where total expenditure remains constant regardless of price changes, connecting it to (II) Unit elastic demand.

Therefore, the accurate pairings of List-I with List-II are: (A)-(I), (B)-(III), (C)-(IV), (D)-(II)