Assertion (A): With a fixed number of firms, an increase in the number of consumers raises the equilibrium price of clothes.
Reason (R): An increase in the number of firms shifts the supply curve to the right.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Both (A) and (R) are true but (R) is not the correct explanation of (A).
Assertion (A): With a fixed number of firms, an increase in the number of consumers raises the equilibrium price of clothes. — True. More consumers want more clothes at every price, so the demand curve shifts right, while supply stays the same. The price and the quantity both rise.
Reason (R): An increase in the number of firms shifts the supply curve to the right. — True. More firms offer more at every price, so the supply curve shifts right.
Why R does not explain A?
R is about the number of firms, which moves supply. A is about the number of consumers, which moves demand, and in A the number of firms does not change at all.
A is explained by the demand side: more consumers shift the demand curve to the right, the supply curve stays where it is, and the new equilibrium has a higher price.
NCERT (2026-27): “Demand Shift … Now let us turn to another example. Suppose due to some reason, there is increase in the number of consumers in the market for clothes. As the number of consumers increases, other factors remaining unchanged, at each price, more clothes will be demanded. Thus, the demand curve will shift rightwards. But this increase in the number of consumers does not have any impact on the supply curve since the supply curve may shift only due to changes in the parameters relating to firms’ behaviour or with an increase in the number of firms, as stated in Chapter 4. This case again can be illustrated through Figure 5.2(a) in which the demand curve DD0 shifts rightward to DD2, the supply curve remaining unchanged at SS0. The figure clearly shows that compared to the old equilibrium point E, at point G which is the new equilibrium point, there is an increase in both price and quantity demanded and supplied.” “Supply Shift … Let us discuss the impact of an increase in the number of firms. Since at each price now more firms will supply the commodity, the supply curve shifts to the right but it does not have any effect on the demand curve. This example can be illustrated by Figure 5.3(b) where the supply curve shifts from SS0 to SS1 whereas the demand curve remains unchanged at DD0. From the figure, we can say that there will be a decrease in price of the commodity and increase in the quantity produced compared to the initial situation.” |