Question

Match the following:
\[ \begin{array}{ll} \textbf{List-I} & \textbf{List-II} \\[8pt] (A)\ \text{Leftward shift in both demand and supply curves} & (I)\ \text{Equilibrium price remains unchanged} \\[6pt] (B)\ \text{Rightward shift in both demand and supply curves} & (II)\ \text{Equilibrium quantity increases} \\[6pt] (C)\ \text{Equal percentage increase in both demand and supply curves} & (III)\ \text{Equilibrium quantity decreases} \\[6pt] (D)\ \text{Supply curve shifts right and demand curve shifts left} & (IV)\ \text{Equilibrium quantity remains unchanged} \end{array} \]

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

Hint:

When both demand and supply shift in the same direction, quantity changes clearly. Equal percentage increase in both demand and supply generally keeps equilibrium price unchanged.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
Simultaneous shifts in demand ($D$) and supply ($S$) curves lead to changes in the market equilibrium price and quantity.
Step 2: Detailed Explanation:
1. (A) Leftward shift in both $D$ and $S$: A decrease in both demand and supply will lead to a certain decrease in equilibrium quantity. The impact on price depends on the relative magnitude of the shifts. Match: (A) $\rightarrow$ (III).
2. (B) Rightward shift in both $D$ and $S$: An increase in both demand and supply will lead to a certain increase in equilibrium quantity. Match: (B) $\rightarrow$ (II).
3. (C) Equal percentage increase in both $D$ and $S$: When demand and supply increase by the same amount, the upward pressure on price from higher demand is exactly offset by the downward pressure from higher supply. Thus, equilibrium price remains unchanged. Match: (C) $\rightarrow$ (I).
4. (D) Supply shifts right and Demand shifts left: If supply increases and demand decreases by equal amounts, the equilibrium quantity remains unchanged while the price falls. Match: (D) $\rightarrow$ (IV).
Step 3: Final Answer:
Matching the pairs results in: (A)-(III), (B)-(II), (C)-(I), (D)-(IV).