Question

Identify the correctly matched pair from the items in Column A by matching them to the items in column B:

Column A	Column B
1. Increase or decrease in demand for a commodity does not cause any change in its price.	(a) Effect on supply, in the case of Perfectly Elastic Demand.
2. Increase or decrease in demand causes a change in the price of the commodity. Equilibrium quantity remains constant.	(b) Effect on demand, in the case of Perfectly Inelastic Supply.
3. Increase or decrease in demand cause a change in the price of the commodity. Equilibrium quantity remains constant.	(c) Effect on demand, in the case of Perfectly Elastic Supply.
4. Increase or decrease in demand for a commodity does not cause any change in its price.	(d) Effect on supply, in the case of Perfectly Elastic Demand.

Options

• 1 - (a)

• 2 - (b)

• 3 - (c)

• 4 - (d)

Answer 1

2 - (b)

Explanation:

When supply is perfectly elastic and demand for commodity increases or decreases, the equilibrium price of the commodity changes but the equilibrium quantity remains constant.