Question

Match List I with List II
List I:
A. Profit maximization factor demand function
B. Not a market failure
C. Most liquid asset
D. Coefficient of determination \(R^2\)
List II:
I. ESS/TSS
II. Factor and output prices
III. Bonds
IV. Economics of scale
Choose the correct answer from the options given below:

• A. A-IV, B-III, C-II, D-I
• B. A-II, B-IV, C-III, D-I
• C. A-II, B-I, C-III, D-IV
• D. A-IV, B-II, C-III, D-I

Hint:

Remember the statistical definition of \(R^2\): \(R^2 = \text{ESS}/\text{TSS}\). This single match (D-I) immediately points to the correct option.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question covers concepts from agricultural economics, microeconomics, financial systems, and statistical analysis.

Step 2: Detailed Explanation:
Let us analyze and pair each entry:
- A. Profit maximization factor demand function:
The demand for a factor of production (input) is derived by maximizing profit.
According to marginal productivity theory, the optimal input quantity depends on both input (factor) prices and output prices.
Thus, A matches with II (Factor and output prices).
- B. Not a market failure:
Market failures include externalities, public goods, and asymmetric information.
Economies of scale (IV) refers to cost advantages obtained by enterprises due to their scale of operation and is a production characteristic, not a market failure.
Thus, B matches with IV (Economics of scale).
- C. Most liquid asset:
Liquidity is the ease with which an asset can be converted into cash without losing value.
Among standard financial securities, bonds (III) represent highly liquid traded assets.
Thus, C matches with III (Bonds).
- D. Coefficient of determination \(R^2\):
In statistics, \(R^2\) measures the proportion of total variation in the dependent variable explained by the regression model.
It is mathematically defined as:
\[ R^2 = \frac{\text{Explained Sum of Squares (ESS)}}{\text{Total Sum of Squares (TSS)}} \]
Thus, D matches with I (ESS/TSS).
This gives the matching sequence: A $\rightarrow$ II, B $\rightarrow$ IV, C $\rightarrow$ III, D $\rightarrow$ I.

Step 3: Final Answer:
The correct matching sequence is A-II, B-IV, C-III, D-I.