Match List-I (event, with a fixed number of firms) with List-II (effect):
| List-I | List-II | ||
|---|---|---|---|
| (A) | Increase in the number of firms | (I) | Demand curve shifts rightward; price rises |
| (B) | Rise in the price of an input | (II) | Demand curve shifts leftward; price falls |
| (C) | Increase in the number of consumers | (III) | Supply curve shifts rightward; price falls |
| (D) | Rise in consumers’ income, for an inferior good | (IV) | Supply curve shifts leftward; price rises |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
Changes on the firms’ side (their number, input prices) shift the supply curve. Changes on the buyers’ side (their number, their income) shift the demand curve.
| List-I | List-II | Reason |
|---|---|---|
| (A) Increase in the number of firms | (III) Supply curve shifts rightward; price falls | More firms offer more at every price, so supply shifts right and the price falls. |
| (B) Rise in the price of an input | (IV) Supply curve shifts leftward; price rises | A dearer input raises marginal cost, so firms offer less. Supply shifts left and the price rises. |
| (C) Increase in the number of consumers | (I) Demand curve shifts rightward; price rises | More buyers want more at every price, so demand shifts right and the price rises. |
| (D) Rise in consumers’ income, for an inferior good | (II) Demand curve shifts leftward; price falls | Buyers spend less on an inferior good when income rises, so demand shifts left and the price falls. |
NCERT (2026-27): “Demand Shift … With an increase in income, consumers are able to spend more money on some goods. But recall from Chapter 2 that the consumers will spend less on an inferior good with increase in income whereas for a normal good, with prices of all commodities and tastes and preferences of the consumers held constant, we would expect the demand for the good to increase at each price as a result of which the market demand curve will shift rightward.” “Demand Shift … 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.” “Supply Shift … Let us consider a situation where all other things remaining constant, there is an increase in the price of an input used in the production of a commodity. This will increase the marginal cost of production of the firms using this input. Therefore, at each price, the market supply will be less than before. Hence, the supply curve shifts leftward. In the Figure 5.3(a), this is shown by a shift in the supply curve from SS0 to SS2. But this increase in input price has no impact on the demand of the consumers since it does not depend on the input prices directly. Therefore, the demand curve remains unchanged. In Figure 5.3(a), this is shown by the demand curve remaining unchanged at DD0. As a result, compared to the old equilibrium, now the market price rises and quantity produced decreases.” “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.” |