CHAPTER 9: THE PRICE PUZZLE: WHAT DRIVES THE MARKET
50 MULTIPLE-CHOICE QUESTIONS (MCQs)
1. What is demand in economics?
(A) The total quantity of goods produced by sellers
(B) The quantity consumers are willing and able to buy at a particular price
(C) The total quantity stored in warehouses
(D) The quantity exported to other countries
Answer: (B) The quantity consumers are willing and able to buy at a particular price
2. According to the Law of Demand, what happens when the price of a product decreases?
(A) Quantity demanded decreases
(B) Quantity demanded remains unchanged
(C) Quantity demanded increases
(D) Supply becomes zero
Answer: (C) Quantity demanded increases
3. What does purchasing power measure?
(A) The amount of money a government collects
(B) How much a unit of currency can buy at a particular time
(C) The quantity produced by a factory
(D) The total income earned by sellers
Answer: (B) How much a unit of currency can buy at a particular time
4. At the beginning of the mango season, mangoes cost ₹150 per kg. How much mango did Srivalli buy at this price?
(A) 1 kg
(B) 2 kg
(C) 3 kg
(D) 4 kg
Answer: (A) 1 kg
5. When the price of mangoes falls to ₹50 per kg, how much does Srivalli buy?
(A) 1 kg
(B) 2 kg
(C) 3 kg
(D) 5 kg
Answer: (C) 3 kg
6. What is individual demand?
(A) The total demand of every consumer in a country
(B) The quantity a particular consumer wants to buy at different prices
(C) The quantity supplied by all sellers
(D) The quantity purchased by the government
Answer: (B) The quantity a particular consumer wants to buy at different prices
7. What is market demand?
(A) The demand of a single consumer
(B) The total quantity supplied by all sellers
(C) The sum of individual demands of all potential buyers
(D) The quantity of goods exported
Answer: (C) The sum of individual demands of all potential buyers
8. At a price of ₹100 per kg, Srivalli demands 2 kg, Alex demands 4 kg, and Israt demands 6 kg of mangoes. What is the market demand?
(A) 6 kg
(B) 10 kg
(C) 12 kg
(D) 14 kg
Answer: (C) 12 kg
9. Which curve generally slopes downward from left to right?
(A) Demand curve
(B) Supply curve
(C) Production curve
(D) Revenue curve
Answer: (A) Demand curve
10. Which of the following is an example of substitute goods?
(A) Car and petrol
(B) Printer and printer cartridge
(C) Tea and coffee
(D) Smartphone and its battery charger
Answer: (C) Tea and coffee
11. What are complementary goods?
(A) Goods that are always sold at the same price
(B) Goods generally used together
(C) Goods that cannot be purchased in a market
(D) Goods that replace each other in consumption
Answer: (B) Goods generally used together
12. If the price of coffee increases while the price of tea remains unchanged, what may happen to the demand for tea?
(A) It may increase
(B) It must become zero
(C) It will always decrease
(D) It will remain unchanged in every situation
Answer: (A) It may increase
13. Which of the following is an example of complementary goods?
(A) Tea and coffee
(B) Apple and banana
(C) Car and petrol
(D) Wheat and rice
Answer: (C) Car and petrol
14. What is the likely effect of an increase in household income on the demand for several goods?
(A) Demand always becomes zero
(B) Demand generally increases
(C) Supply always decreases
(D) Prices must remain unchanged
Answer: (B) Demand generally increases
15. Which factor can influence demand even when the price of a product remains unchanged?
(A) Consumer preferences
(B) Only the colour of the seller’s shop
(C) Only the number of roads in a city
(D) The shape of the currency notes
Answer: (A) Consumer preferences
16. Why may demand for sweaters increase during winter?
(A) Because all goods become free
(B) Because of seasonal changes
(C) Because supply always becomes zero
(D) Because consumers stop considering prices
Answer: (B) Because of seasonal changes
17. What may consumers do if they expect the price of a product to rise in the future?
(A) They may buy it immediately
(B) They will always stop buying it
(C) They will reduce their present demand in every case
(D) They will force the product out of the market
Answer: (A) They may buy it immediately
18. What is the principle of diminishing marginal utility?
(A) The usefulness of every product increases forever
(B) Additional utility generally declines as more units of a product are consumed
(C) The price of every product remains constant
(D) Supply always decreases when income increases
Answer: (B) Additional utility generally declines as more units of a product are consumed
19. What is supply?
(A) The quantity consumers wish to purchase
(B) The quantity sellers are willing and able to offer at a particular price
(C) The total income of consumers
(D) The amount of tax collected by the government
Answer: (B) The quantity sellers are willing and able to offer at a particular price
20. According to the Law of Supply, what happens when the price of a product increases?
(A) Quantity supplied generally increases
(B) Quantity supplied always becomes zero
(C) Quantity demanded must increase
(D) Sellers necessarily leave the market
Answer: (A) Quantity supplied generally increases
21. What is individual supply?
(A) The total supply of all goods in an economy
(B) The quantity offered by a particular seller at different prices
(C) The total demand of consumers
(D) The quantity purchased by a single consumer
Answer: (B) The quantity offered by a particular seller at different prices
22. What is market supply?
(A) The sum of the individual supplies of all sellers
(B) The total demand of all consumers
(C) The quantity purchased by the government
(D) The total income earned by households
Answer: (A) The sum of the individual supplies of all sellers
23. According to the chapter’s supply schedule, how much mango does a seller supply at ₹50 per kg?
(A) 1 kg
(B) 2 kg
(C) 3 kg
(D) 5 kg
Answer: (A) 1 kg
24. Three sellers supply 1 kg, 3 kg, and 2 kg of mangoes respectively at ₹50 per kg. What is the total market supply?
(A) 3 kg
(B) 5 kg
(C) 6 kg
(D) 8 kg
Answer: (C) 6 kg
25. Which curve generally slopes upward from left to right?
(A) Demand curve
(B) Supply curve
(C) Individual demand schedule
(D) Consumption curve
Answer: (B) Supply curve
26. How can improved technology affect supply?
(A) It always increases production costs
(B) It may reduce production costs and increase supply
(C) It eliminates all demand
(D) It prevents sellers from producing goods
Answer: (B) It may reduce production costs and increase supply
27. How can an increase in the number of sellers affect market supply?
(A) It may increase market supply
(B) It always eliminates market supply
(C) It necessarily reduces the number of consumers
(D) It makes demand equal to zero
Answer: (A) It may increase market supply
28. Why might a farmer grow more chickpeas instead of wheat?
(A) Chickpeas may offer higher profitability
(B) Wheat can never be cultivated
(C) Consumers do not purchase agricultural products
(D) The price of every crop is always identical
Answer: (A) Chickpeas may offer higher profitability
29. How may producers respond if they expect demand for their goods to increase in the future?
(A) They may increase production
(B) They must stop production
(C) They will always destroy their goods
(D) They will necessarily reduce supply to zero
Answer: (A) They may increase production
30. What happens when market supply is lower than market demand?
(A) Prices tend to rise
(B) Prices must become zero
(C) A surplus necessarily occurs
(D) All consumers stop purchasing goods
Answer: (A) Prices tend to rise
31. What is market equilibrium?
(A) A situation in which demand is always greater than supply
(B) A situation in which supply is always greater than demand
(C) A situation in which quantity demanded equals quantity supplied
(D) A situation in which the government produces all goods
Answer: (C) A situation in which quantity demanded equals quantity supplied
32. According to Table 9.3 in the chapter, what is the equilibrium price of mangoes?
(A) ₹40
(B) ₹50
(C) ₹100
(D) ₹150
Answer: (C) ₹100
33. According to Table 9.3, what is the equilibrium quantity of mangoes?
(A) 6 kg
(B) 8 kg
(C) 12 kg
(D) 18 kg
Answer: (C) 12 kg
34. What happens when quantity demanded exceeds quantity supplied?
(A) Excess supply occurs
(B) Excess demand occurs
(C) Market supply becomes unlimited
(D) Equilibrium is necessarily maintained
Answer: (B) Excess demand occurs
35. What happens when quantity supplied exceeds quantity demanded?
(A) A shortage occurs
(B) Excess demand occurs
(C) Excess supply occurs
(D) Demand automatically becomes zero
Answer: (C) Excess supply occurs
36. In the chapter’s mango market example, what happens at a price of ₹40?
(A) Quantity demanded is 38 kg and quantity supplied is 6 kg
(B) Quantity demanded is 6 kg and quantity supplied is 38 kg
(C) Quantity demanded equals quantity supplied at 12 kg
(D) Quantity demanded is zero
Answer: (A) Quantity demanded is 38 kg and quantity supplied is 6 kg
37. Why does market equilibrium keep changing in the real world?
(A) Markets never respond to changing conditions
(B) Demand and supply are affected by factors such as weather, technology, and events
(C) All products have fixed prices
(D) Consumers never change their preferences
Answer: (B) Demand and supply are affected by factors such as weather, technology, and events
38. What happened to the demand for face masks during the COVID-19 pandemic, according to the chapter?
(A) It disappeared completely
(B) It increased rapidly
(C) It remained zero
(D) It became unrelated to price
Answer: (B) It increased rapidly
39. Why might hotel room tariffs increase during New Year’s Eve?
(A) Demand may be very high
(B) All hotel rooms become free
(C) The number of tourists always becomes zero
(D) Hotels stop providing accommodation
Answer: (A) Demand may be very high
40. What is a price ceiling?
(A) A minimum price fixed by the government
(B) A maximum price a seller is permitted to charge
(C) The price selected by a single consumer
(D) The highest production cost of a firm
Answer: (B) A maximum price a seller is permitted to charge
41. What is a price floor?
(A) A minimum price limit set for a product or service
(B) A maximum price charged by every seller
(C) The lowest income of a consumer
(D) The total quantity supplied in a market
Answer: (A) A minimum price limit set for a product or service
42. Why may the government impose a price ceiling on essential medicines?
(A) To prevent overcharging and improve affordability
(B) To eliminate all medicine production
(C) To ensure that medicine prices always increase
(D) To prevent consumers from purchasing medicines
Answer: (A) To prevent overcharging and improve affordability
43. What is a monopoly?
(A) A market with many small sellers and no dominant firm
(B) A market structure in which a single seller controls the supply of a product or service
(C) A market in which consumers determine every production decision
(D) A market with no goods or services
Answer: (B) A market structure in which a single seller controls the supply of a product or service
44. Which organisation regulates the banking sector in India, as mentioned in the chapter?
(A) SEBI
(B) TRAI
(C) RBI
(D) CCPA
Answer: (C) RBI
45. Which organisation regulates the telecommunications sector in India?
(A) TRAI
(B) RBI
(C) SEBI
(D) Election Commission of India
Answer: (A) TRAI
46. What is hoarding?
(A) Selling all goods at reduced prices
(B) Accumulating goods beyond what is immediately necessary, often due to anticipated shortages or price increases
(C) Producing goods with improved technology
(D) Providing public services free of charge
Answer: (B) Accumulating goods beyond what is immediately necessary, often due to anticipated shortages or price increases
47. What is black marketing?
(A) The legal sale of goods at government-approved prices
(B) The illegal trade of goods and services that are banned or regulated
(C) The production of goods for public use
(D) The exchange of goods between family members
Answer: (B) The illegal trade of goods and services that are banned or regulated
48. Which of the following is an example of a public good provided by the government?
(A) A privately owned luxury car
(B) A personal mobile phone
(C) Streetlighting
(D) A privately purchased television
Answer: (C) Streetlighting
49. What is one possible disadvantage of excessive government regulation?
(A) It always eliminates production costs
(B) It may discourage innovation and entrepreneurship
(C) It guarantees unlimited supply
(D) It automatically increases every business’s profits
Answer: (B) It may discourage innovation and entrepreneurship
50. Why can government provision or funding of public goods be necessary?
(A) Public goods benefit citizens, but private companies may not find it profitable to provide them
(B) Public goods are useful only to business owners
(C) Public goods always generate very high direct profits
(D) Public goods are never needed by society
Answer: (A) Public goods benefit citizens, but private companies may not find it profitable to provide them
CLASS 9 SOCIAL SCIENCE
CHAPTER 9: THE PRICE PUZZLE: WHAT DRIVES THE MARKET
ASSERTION AND REASON QUESTIONS
Directions: Choose the correct option for each question.
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
Q1. Assertion (A): When the price of a product falls, its quantity demanded generally increases.
Reason (R): The Law of Demand describes an inverse relationship between price and quantity demanded, assuming other factors remain constant.
Answer: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
Q2. Assertion (A): Demand refers only to a person’s desire to purchase a product.
Reason (R): Demand requires both willingness and the ability or purchasing power to buy a product.
Answer: (D) Assertion is false, but Reason is true.
Q3. Assertion (A): Tea and coffee are examples of substitute goods.
Reason (R): Substitute goods can replace one another, and a change in the price of one can affect the demand for the other.
Answer: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
Q4. Assertion (A): Smartphones and earphones are examples of complementary goods.
Reason (R): Complementary goods are generally used together to provide utility to consumers.
Answer: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
Q5. Assertion (A): An increase in household income can increase the quantity demanded of several goods, even when their prices remain unchanged.
Reason (R): Consumers may be able to afford more goods or choose higher-quality products when their income rises.
Answer: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
Q6. Assertion (A): The supply curve generally slopes downward from left to right.
Reason (R): According to the Law of Supply, quantity supplied generally increases when price rises and decreases when price falls.
Answer: (D) Assertion is false, but Reason is true.
Q7. Assertion (A): Improvements in technology can increase the supply of a product.
Reason (R): Improved technology can reduce production costs and enable producers to produce more.
Answer: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
Q8. Assertion (A): Market equilibrium occurs when the quantity demanded equals the quantity supplied.
Reason (R): At equilibrium, there is neither excess demand nor excess supply.
Answer: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
Q9. Assertion (A): Market equilibrium always remains unchanged in the real world.
Reason (R): Changes in weather, technology, income, trends and other conditions can shift demand or supply and move the market towards a new equilibrium.
Answer: (D) Assertion is false, but Reason is true.
Q10. Assertion (A): Excessive government regulation can sometimes reduce production and discourage innovation.
Reason (R): Strict price controls may reduce producers’ incentives, while extensive regulations can increase compliance costs for businesses.
Answer: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
