The Price Puzzle Class 9 Question and Answer.
Q. What are the factors that influence the demand for and supply of goods and services in a market?
Ans – Factors influencing demand and supply
Demand for goods and services is influenced by:
Price of the goods, Income of consumers, Tastes and preferences, Prices of related goods, Expectations about future prices or income
Supply is influenced by:
Price of the goods, Cost of production (raw materials, wages, etc.), Technology, Number of sellers/producers, Government policies, such as taxes and subsidies.
Thus, changes in these factors affect market demand and supply and, consequently, market prices.
Q. How are prices of goods and services determined through demandand supply interactions?
Ans – Prices of goods and services are determined by the interaction of demand and supply in a market.
When demand is greater than supply, prices tend to rise.
When supply is greater than demand, prices tend to fall.
When demand and supply are balanced, the market reaches an equilibrium price.
Thus, demand and supply together influence the market price and quantity of goods and services.
Q. What is market equilibrium, and does it exist in the real world?
Ans – Market equilibrium is the situation where the quantity demanded equals the quantity supplied at a particular price. This price is called the equilibrium price.
In the real world, perfect equilibrium may not exist continuously because demand and supply keep changing due to factors such as income, preferences, costs, weather, and government policies. However, markets often move towards an equilibrium as prices adjust.
Q. How and why does the government intervene in the market?
Ans – The government intervenes in the market to correct market failures and protect the welfare of people.
It intervenes by:
Regulating prices of essential goods and services.
Imposing taxes and providing subsidies.
Providing public goods and services such as education, healthcare, and infrastructure.
Protecting consumers and weaker sections from unfair market practices.
Thus, government intervention helps promote fairness, stability, and social welfare in the economy.
NCERT Questions:-
1..An increase in income always leads to a rise in demand for goods. Defend or refute, giving reasons for the same.
Ans – Refute. An increase in income does not always lead to a rise in demand for all goods.
When income increases, people may demand more normal goods, but demand for inferior goods may decrease as people shift to better alternatives. Demand also depends on tastes, prices of related goods, and expectations.
Example: With higher income, a family may buy more fresh fruit but reduce its purchase of cheaper, lower-quality food.
2. If petrol prices double, what happens to
a. Demand for diesel cars b. Demand for electric cars c. Demand for car accessories d. Demand for public transport.
Ans – If petrol prices double:
a. Demand for diesel cars: Increases — consumers may shift from petrol cars to diesel cars because diesel may become relatively cheaper to use.
b. Demand for electric cars: Increases — electric cars become more attractive as petrol becomes expensive.
c. Demand for car accessories: May decrease — higher fuel costs may reduce car usage and spending on non-essential accessories.
d. Demand for public transport: Increases — people may prefer buses, trains, etc., to reduce their travel expenses.
3. A farmer traditionally irrigates fields manually(labour-intensive). He installs drip irrigation (a technology upgrade) that reduces water use by 40 per cent and increases yield by 30 per cent. How does this affect
a. His cost of production
b. His willingness to supply at different prices
c. The overall market supply if many farmers adopt this technology
Ans –
a. Cost of production: The cost per unit is likely to decrease because drip irrigation saves 40% water and increases yield by 30%, improving productivity.
b. Willingness to supply: The farmer will be more willing to supply at different prices, as lower production costs make production more profitable.
c. Overall market supply: If many farmers adopt the technology, market supply will increase because farmers can produce more at lower cost.
4. During online festival sales, the prices of many products are very low. Use the concept of demand and supply to explain why the sellers sell at such a low price. What happens to the equilibrium when the price is lowered? Does this benefit only consumers or sellers as well? Explain.
Ans – During online festival sales, sellers often offer low prices to attract more customers and increase sales. They may also have excess stock, lower costs, or face strong competition.
Lower price – higher quantity demanded: More consumers are willing to buy.
For sellers: Although the price per unit is lower, the increase in quantity sold can raise total sales and help clear old stock.
Equilibrium: A lower price can increase demand and create a situation where demand is greater than supply. The market then adjusts until demand and supply are balanced again.
Thus, low festival prices can benefit consumers through cheaper products and sellers through higher sales and faster stock clearance.