Micro

Market Equilibrium

Medium

Identify the correct statement regarding government intervention in case of price control from the following.

Fall in price below a certain level is not desirable for some goods & services, hence the government sets floor price.

Price ceiling accompanied by rationing of the goods may result in the reduction of black market.

To prevent price fall because of excess supply, government needs to sell the surplus at the predetermined price.

Price ceiling is generally imposed on luxury items.

✅ Correct Option: 1

A price floor is set when a fall in price below a certain level is undesirable, e.g. minimum support prices for foodgrains or minimum wages, so option 1 is correct. Price ceilings apply to essential (not luxury) goods, and ceilings with rationing typically give rise to black markets rather than reduce them. Against excess supply, the government buys the surplus at the floor price; it does not sell it.

2025: 28 May Shift 2

Arrange the statements to define the relationship between elasticity and expenditure of a commodity.

(A) The percentage increase in quantity demanded is greater than the percentage decline in the price.

(B) The impact on expenditure depends on how responsive the demand for the good is to the price change.

(D) Expenditure on the goods will increase.

Choose the correct answer from the options given below:

2026: 11 May Shift 1

Excess demand and excess supply can be adjusted by the invisible hand to reach the ________________ .

2025: 31 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Demand shifts right and supply remains unchanged.	(I) Price increase, quantity increases.
(B) Supply shifts right and demand remains unchanged.	(II) Price decrease, quantity increases.
(C) Demand shifts left and supply shifts left.	(III) Quantity decreases.
(D) Supply shifts right and demand shifts right.	(IV) Quantity increases.

Choose the correct answer from the options given below:

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

2026: 13 May Shift 2

In the perfect competition, the government regulation on goods which results in the creation of a black market is called ?

2025: 3 June Shift 2

If the government fixed maximum price of product below the market price then product will have?

2025: 30 May Shift 1

What will be elasticity of demand of a commodity when its price rises by 20% and quantity demanded falls from 125 units to 75 units?

Identify the correct statement regarding government intervention in case of price control from the following.

Solution

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