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CUET Economics 2025 PYQs16 May Shift 1. Free, no login required.

Micro

past year questions, CUET Economics 2025 16 May Shift 1

Forms of Market

past year questions, Micro, CUET Economics 2025 16 May Shift 1

Medium

Match List-I with List-II

List-IList-II
(A) Excess demand(I) Supernormal profits
(B) Excess supply(II) Perfect competition
(C) Entry of new firms in the market(III) Price tends to fall
(D) Price taker(IV) Price tends to rise

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 1

Option 1 -> (A) Excess demand leads to price rise (IV); (B) Excess supply leads to price fall (III); (C) Entry of new firms occurs due to supernormal profits (I); (D) Price taker is characteristic of perfect competition (II).

Option 2 -> Incorrectly matches excess demand with price fall and excess supply with price rise, which contradicts basic demand-supply dynamics.

Option 3 -> Incorrectly matches entry of new firms with perfect competition and price taker with supernormal profits.

Option 4 -> Contains multiple incorrect matches for both demand-supply concepts and market structure characteristics.

Hence, Option 1: (A) - (IV), (B) - (III), (C) - (I), (D) - (II) -> When demand exceeds supply (excess demand), buyers compete for limited goods, pushing prices upward. Conversely, excess supply creates downward pressure on prices. New firms are attracted to markets where existing firms earn supernormal profits, seeking to capture these economic rents. A price taker cannot influence market price individually, which is the defining characteristic of firms in perfect competition where no single entity has market power. -> correct

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