Match the items of List I with items of List II and indicate the correct matching. List-I List-II a. Non-price quantity relationships of demand 1. Extension and contraction of demand b. Income effect of a price rise greater than its substitution effect 2. Ordinal utility approach c. Transitivity and consistency of choices 3. Increase and decrease in demand d. Price quantity relationships of demand 4. Giffen goods

a-4, b-2, c-3, d-1
a-2, b-1, c-4, d-3
a-3, b-4, c-2, d-1
a-1, b-2, c-3, d-4

The correct answer is: D. a-1, b-2, c-3, d-4

List-I | List-II
——- | ——–
a. Non-price quantity relationships of demand | 1. Extension and contraction of demand
b. Income effect of a price rise greater than its substitution effect | 2. Giffen goods
c. Transitivity and consistency of choices | 3. Ordinal utility approach
d. Price quantity relationships of demand | 4. Increase and decrease in demand

Explanation:

a. Non-price quantity relationships of demand: This refers to the factors other than price that can affect the demand for a good or service. These factors include income, taste, and expectations.

b. Income effect of a price rise greater than its substitution effect: This refers to the situation where the income effect of a price rise is greater than the substitution effect, resulting in a decrease in demand.

c. Transitivity and consistency of choices: This refers to the principle that if a consumer prefers good A to good B, and good B to good C, then they must also prefer good A to good C.

d. Price quantity relationships of demand: This refers to the relationship between the price of a good and the quantity demanded of that good. The law of demand states that, ceteris paribus, the quantity demanded of a good will decrease as the price of that good increases.

Giffen goods are a type of good that is an exception to the law of demand. In the case of a Giffen good, the demand for the good actually increases as the price of the good increases. This is because the good is a necessity for the consumer, and the consumer is willing to pay more for the good even though it is now more expensive.

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