Arrange the following in the order in which they happen in a market system:
(A) Producers are likely to increase the production of the good.
(B) The price of the good rises.
(C) Buyers demand more of a certain good.
(D) The rise in price signals to producers that society wants more of the good than is being produced.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (C), (B), (D), (A)
(C) Buyers demand more of a certain good. — The chain starts with a rise in demand.
(B) The price of the good rises. — When buyers want more, the price goes up.
(D) The rise in price signals to producers that society wants more of the good than is being produced. — The higher price carries this information to the producers.
(A) Producers are likely to increase the production of the good. — Producers respond to the signal by producing more.
NCERT (2026-27): “1.3.2 The Market Economy In a market system, all goods or services come with a price (which is mutually agreed upon by the buyers and sellers) at which the exchanges take place. The price reflects, on an average, the society’s valuation of the good or service in question. If the buyers demand more of a certain good, the price of that good will rise. This signals to the producers of that good that the society as a whole wants more of that good than is currently being produced and the producers of the good, in their turn, are likely to increase their production. In this way, prices of goods and services send important information to all the individuals across the market and help achieve coordination in a market system. …” |