1. The quantity of a product that people are willing and able to buy at a particular price is called:
(a) Supply
(b) Demand
(c) Market equilibrium
(d) Price ceiling
2. Which of the following correctly represents the Law of Demand?
(a) Price rises, quantity demanded rises
(b) Price falls, quantity demanded falls
(c) Price rises, quantity demanded falls
(d) Price and quantity demanded have a direct relationship
3. Market demand is:
(a) Demand of one individual consumer
(b) Sum of all individual demands
(c) Quantity supplied by all sellers
(d) Price fixed by the government
4. Tea and coffee are examples of:
(a) Complementary goods
(b) Substitute goods
(c) Public goods
(d) Inferior goods
5. The demand curve is:
(a) Upward sloping
(b) Downward sloping
(c) Vertical straight line
(d) Horizontal straight line
6. Assertion (A): An improvement in technology increases the supply of a good.
Reason (R): Technology reduces the cost of production, enabling producers to supply more at the same price.
(a) Both A and R are true and R is the correct explanation of A.
(b) Both A and R are true but R is not the correct explanation of A.
(c) A is true but R is false.
(d) A is false but R is true.
7. Assertion (A): In the real world, market equilibrium is never stable.
Reason (R): Demand and supply conditions keep changing due to factors like weather, technology, income and pandemics.
(a) Both A and R are true and R is the correct explanation of A.
(b) Both A and R are true but R is not the correct explanation of A.
(c) A is true but R is false.
(d) A is false but R is true.
8. A price ceiling is:
(a) The minimum price fixed by the government
(b) The maximum price fixed by the government
(c) The equilibrium price
(d) The price determined by demand and supply only
9. Public goods like roads and street lighting are provided by the government because:
(a) They generate huge profits for private firms
(b) Private firms cannot charge individual users easily
(c) They are always in short supply
(d) Demand for them is zero
10. Which of the following is a limitation of excessive government intervention?
(a) Increased producer incentives
(b) Reduced compliance burden
(c) Price distortions and reduced motivation to supply
(d) Faster innovation
1. Define demand as given in the chapter.
2. What is the difference between individual demand and market demand?
3. State the Law of Supply.
4. What is market equilibrium?
5. Distinguish between price ceiling and price floor.
6. Why does the government provide public goods?
1. Explain any three determinants of demand other than the price of the good itself.
2. How do substitute goods and complementary goods affect the demand for a product? Give one example of each.
3. Describe the shape of the demand curve and the supply curve. Why do they slope in opposite directions?
4. What happens when there is excess demand or excess supply in a market? How is equilibrium restored?
5. Why does the government intervene in markets? Mention any three reasons.
1. “Markets are dynamic and equilibrium is never stable in the real world.” Analyse this statement with reference to changes in demand and supply conditions.
2. Examine the role of the government in regulating markets. Discuss both the need for intervention and its possible limitations.
3. Explain the concept of market equilibrium with the help of demand and supply schedules. What factors cause the market to move towards a new equilibrium?
“Demand is not just the desire to buy something; it is the willingness complemented by the ability or purchasing power to buy it. As with mangoes, when the price of any product rises, the quantity demanded decreases, and when the price falls, the quantity demanded increases. This phenomenon is called the Law of Demand…”
(a) What is demand according to the source?
(b) State the Law of Demand mentioned in the passage.
(c) Why is purchasing power important for demand?
(d) How does the Law of Demand appear on a demand curve?
“At a price of ₹100, the quantity demanded equals the quantity supplied. This point is known as the market equilibrium. At this point, there is no pressure for prices to change, and the market is ‘cleared’, which means that there is neither a shortage (excess demand) nor a surplus (excess supply).”
(a) Define market equilibrium as per the source.
(b) What is meant by the market being ‘cleared’?
(c) What happens when price is below equilibrium?
(d) What happens when price is above equilibrium?
Section B (2 marks each – any two relevant points, 1 mark each)
1. Demand = quantity consumers are willing and able to buy at a given price (purchasing power + willingness).
2. Individual demand = one consumer’s demand schedule; Market demand = sum of all individual demands.
3. Law of Supply: Price rises → quantity supplied rises (direct relationship).
4. Market equilibrium = point where quantity demanded equals quantity supplied; no shortage or surplus.
5. Price ceiling = government-fixed maximum price; Price floor = government-fixed minimum price.
6. Private firms do not provide public goods as they cannot easily charge users and earn profit.
Section C (3 marks each – any three points, 1 mark each)
1. Income, taste/preferences, prices of related goods, seasonality, future expectations, population.
2. Substitutes: rise in price of one increases demand for the other (tea-coffee). Complements: rise in price of one decreases demand for the other (cars-petrol).
3. Demand curve slopes downward (inverse price-quantity relationship); Supply curve slopes upward (direct relationship).
4. Excess demand → price rises; excess supply → price falls until equilibrium is reached.
5. Prevent exploitation (monopoly, hoarding), ensure equity for poor, provide public goods.
Section D (5 marks each – any five relevant analytical points with examples)
1. Dynamic markets due to technology, weather, pandemics, income changes; equilibrium constantly shifts (COVID mask example).
2. Need: regulate monopolies, price ceiling/floor, public goods; Limitations: reduced incentives, compliance burden, discourages innovation.
3. Use Table 9.3; explain shortage, surplus and restoration of equilibrium at ₹100.
Section E (1 mark per sub-question)
(a) Quantity willing and able to buy at a price.
(b) Inverse relationship between price and quantity demanded.
(c) Without purchasing power, desire does not become demand.
(d) Downward-sloping curve.
(a) Qd = Qs; no shortage or surplus.
(b) Market cleared; neither excess demand nor excess supply.
(c) Shortage/excess demand.
(d) Surplus/excess supply.
All questions are answerable from the NCERT chapter text. Reviewed by GFIS faculty.