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

Concept:
Equilibrium in a market is determined at the point where demand and supply are equal. At equilibrium: \[ D = S \] where, \[ D = \text{Demand} \] \[ S = \text{Supply} \] When demand or supply changes, equilibrium price and equilibrium quantity also change.

Step 1: Leftward shift in both demand and supply curves.
A leftward shift means a decrease. So, if both demand and supply shift leftward, both demand and supply decrease. Since both curves shift left, the equilibrium quantity decreases. Therefore, \[ (A) \rightarrow (III) \]

Step 2: Rightward shift in both demand and supply curves.
A rightward shift means an increase. So, if both demand and supply shift rightward, both demand and supply increase. As both curves move to the right, equilibrium quantity increases. Therefore, \[ (B) \rightarrow (II) \]

Step 3: Equal percentage increase in both demand and supply curves.
If demand and supply increase by the same percentage, the effect on price cancels out. This is because increase in demand tends to raise price, while increase in supply tends to reduce price. When both increase equally, the equilibrium price remains unchanged. Therefore, \[ (C) \rightarrow (I) \]

Step 4: Supply curve shifts right and demand curve shifts left.
Rightward shift of supply means supply increases. Leftward shift of demand means demand decreases. Both changes create downward pressure on price. However, when supply increases and demand decreases in equal proportion, equilibrium quantity remains unchanged. Therefore, \[ (D) \rightarrow (IV) \] Thus, the correct matching is: \[ (A)-(III),\quad (B)-(II),\quad (C)-(I),\quad (D)-(IV) \] Hence, the correct answer is: \[ \boxed{\text{(A)}} \]