While studying market equilibrium, which of the following are assumed to remain constant?
(A) Tastes and preferences of the consumers
(B) Prices of related commodities
(C) Technology
(D) Size of the market
(E) Price of the commodity itself
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B), (C) and (D) only
The demand and supply curves are drawn with the other factors held constant. The price of the good itself is not held constant; the market determines it where demand equals supply.
(A) Tastes and preferences of the consumers — Correct. A change in tastes would shift the demand curve, so tastes are held constant.
(B) Prices of related commodities — Correct. A change in the price of a substitute or complement shifts the demand curve.
(C) Technology — Correct. A change in technology shifts the supply curve.
(D) Size of the market — Correct. A change in the size of the market shifts the curves, so it is held constant too.
(E) Price of the commodity itself — Incorrect. The price of the commodity is what the analysis finds. It is read along the curves, not held fixed.
NCERT (2026-27): “Shifts in Demand and Supply In the above section, we studied market equilibrium under the assumption that tastes and preferences of the consumers, prices of the related commodities, incomes of the consumers, technology, size of the market, prices of the inputs used in production, etc remain constant. However, with changes in one or more of these factors either the supply or the demand curve or both may shift, thereby affecting the equilibrium price and quantity. …” |