NCERT Solutions Exploring Society: India and Beyond Chapter 12 –253Prices and Markets — In-text Questions

With many buyers and many sellers, no single person can decide the price. Each buyer can walk to the next cart; each seller can wait for the next customer. Out of thousands of such small choices a common, going price appears.

Prices respond in two directions:

• Price responds to the interaction — it moves up when buyers compete for scarce guavas and down when sellers compete for scarce buyers.
• The interaction responds to the price — a high price makes buyers buy less and sellers bring more; a low price does the reverse. The chapter's own conclusion: over time “the amount of goods offered by the sellers and the amount required by the buyers help determine the price”.

Look carefully at Fig. 12.5. The price board reads ₹80/-. The cart is still heaped full of guavas. Seven or eight people are in the picture and almost all of them are walking past; only one or two have stopped, and nobody is carrying a bag of guavas away.

So at too high a price:

• Demand collapses. Buyers find the price “very high” and either offer less or leave.
• The goods stay unsold. Guavas are perishable — unsold fruit will rot within days, so this is a real loss, not just a delayed sale.
• The seller's earnings fall, even though the price per kilo is high.

Now look at Fig. 12.6. The board reads ₹20/- and the cart is completely empty — only a few loose leaves are left on the wooden tray. On the left, buyers are walking away with full bags of guavas. On the right, a customer is still holding out his money and the seller is spreading his hands: there is nothing left to sell. A child and several other buyers are still waiting.

So at too low a price:

• Demand shoots up and the stock is sold out very quickly.
• Many buyers go home empty-handed — being cheap is no use if the goods are gone.
• The seller earns too little, perhaps less than his own cost, so he makes a loss and may not be able to buy stock for tomorrow.

Fig. 12.7 shows what “just right” looks like at ₹40/-. The cart still has plenty of guavas on it, the seller is weighing a lot on his scale, one customer is being served while another examines a fruit, and two buyers are already walking away with filled bags. Nobody is turned away and nothing is left to rot. A QR code on the cart shows the payment is as easy as the price is fair.

And there is a second lesson, which the chapter states straight after the pictures: “the seller can assess approximately what quantity of guavas are needed by the buyers and offer that quantity in the market in future.” The right price does not only settle today's sale — it tells the seller how much to bring tomorrow.