The Price Puzzle: What Drives the Market — Class 9 MCQs with Answers

The Price Puzzle: What Drives the Market — important questions & MCQs with answers (Class 9 Social Science)

6 solved questions from this chapter's difficulty levels, each with its answer and explanation. Tap an option to check yourself.

0 of 6 answered

1. Q1 of 6Easy

   In economics, what is a 'market'?

   AOnly a physical shop where goods are keptBA place where only the government sells thingsCA building used only for storing grainDAny arrangement that brings buyers and sellers together to exchange goods or services
   Show answerHide answer

   Answer: Any arrangement that brings buyers and sellers together to exchange goods or services

   Explanation: A market is any arrangement, physical or virtual, that brings buyers and sellers together to exchange goods and services.

2. Q2 of 6Easy

   In economics, 'demand' for a good means:

   AThe total quantity produced by sellersBThe desire to have a good even without money to payCThe quantity of a good buyers are willing and able to buy at a given priceDThe cost of producing the good
   Show answerHide answer

   Answer: The quantity of a good buyers are willing and able to buy at a given price

   Explanation: Demand is the quantity of a good that buyers are both willing and able to purchase at a given price during a period of time.

3. Q3 of 6Medium

   A sudden rise in the wages a bakery must pay its workers, with no change in bread prices, will most likely cause the bakery's supply of bread to:

   ABecome unlimitedBIncreaseCStay exactly the same foreverDDecrease
   Show answerHide answer

   Answer: Decrease

   Explanation: Higher input costs raise the cost of production, so at the same price the bakery supplies less, decreasing supply.

4. Q4 of 6Medium

   Assertion (A): Goods such as streetlights and public parks are usually not provided by private companies. Reason (R): Such public goods do not generate direct profit.

   ABoth A and R are true and R is the correct explanation of ABBoth A and R are true but R is not the correct explanation of ACA is true but R is falseDA is false but R is true
   Show answerHide answer

   Answer: Both A and R are true and R is the correct explanation of A

   Explanation: Both are true, and R explains A. The chapter says public goods are usually not provided by private companies because they do not generate direct profit.

5. Q5 of 6Hard

   In a mandi, ten farmers each sell almost identical potatoes and buyers can easily compare prices. One farmer tries to charge double. In this competitive setting, the most likely outcome is that:

   AThe mandi shuts downBAll farmers immediately raise their prices to matchCThat farmer sells very little, as buyers move to other sellers' lower pricesDBuyers are forced to pay the higher price
   Show answerHide answer

   Answer: That farmer sells very little, as buyers move to other sellers' lower prices

   Explanation: With many sellers of identical goods and informed buyers, an individual cannot charge much above the market price without losing customers.

6. Q6 of 6Hard

   Assertion (A): If Srivalli, Alex and Israt buy 2 kg, 4 kg and 6 kg of mangoes at ₹100 per kg, the market demand at that price is 12 kg. Reason (R): Market demand is the sum of the individual demands of all buyers at a given price.

   ABoth A and R are true and R is the correct explanation of ABBoth A and R are true but R is not the correct explanation of ACA is true but R is falseDA is false but R is true
   Show answerHide answer

   Answer: Both A and R are true and R is the correct explanation of A

   Explanation: Both are true, and R explains A: adding the three individual demands gives 2 + 4 + 6 = 12 kg.

The Price Puzzle: What Drives the Market notes: key concepts (Class 9 Social Science)

Prices are not set by anyone in particular; they emerge where the intentions of buyers and sellers meet. This chapter builds demand and supply, explains why each slopes as it does, and shows how equilibrium price is reached and why it shifts.

Market

Any arrangement that brings buyers and sellers into contact, whether a physical marketplace or an online platform.

Demand

The quantity of a good buyers are willing AND able to purchase at a given price in a given period — willingness alone is not demand.

Law of demand

Other things being equal, a rise in price reduces the quantity demanded and a fall in price raises it, giving a downward-sloping demand curve.

Determinants of demand

Besides price: income, the prices of substitutes and complements, tastes, expectations and the number of buyers.

Substitutes and complements

Substitutes replace one another, so a rise in one's price raises demand for the other; complements are consumed together, so the effect is reversed.

Supply

The quantity of a good producers are willing and able to offer for sale at a given price in a given period.

Law of supply

Other things being equal, a higher price makes producers willing to supply more, giving an upward-sloping supply curve.

Determinants of supply

Besides price: the cost of inputs, technology, the number of sellers, and expectations about future prices.

Equilibrium price

The price at which the quantity demanded exactly equals the quantity supplied, so there is no tendency for the price to change.

Surplus (excess supply)

When the price is above equilibrium, sellers cannot sell all they offer, and competition among them pushes the price down.

Shortage (excess demand)

When the price is below equilibrium, buyers cannot obtain all they want, and competition among them pushes the price up.

Shifts in demand and supply

A change in any determinant other than price shifts the whole curve and moves the equilibrium to a new price and quantity.

Price as a signal

Prices tell producers what to make and consumers what to economise on, coordinating countless decisions without any central direction.