The worked question on this page is original educational practice. It is not represented as a question from an official previous-year examination paper.
01 / UNDERSTANDING
Review the question
Create an original market disruption scenario and require a price-and-quantity prediction with explicit assumptions. Include output evidence that distinguishes the two candidate explanations. An original checkpoint is: With unchanged demand, what combination is consistent with the illustrated adverse supply shock? Supported answer: Higher prices and lower traded quantity. Explain the decisive fact, then alter one condition and solve again. This is an original practice method, not a claim that the question appeared in an official past paper.
02 / UNDERSTANDING
The concept in context
Observed price movement alone cannot identify the shock; quantity evidence and the wider context are also needed. A useful study check is to identify the initial demand or supply disturbance, then compare predicted price and quantity directions together. Explain why the method fits the stated facts before applying it to a changed situation.
03 / UNDERSTANDING
A worked learning case
A fictional transport disruption reduces the amount of vegetables reaching a city. With demand initially unchanged, the available supply falls, market prices rise and traded quantity falls. A different case involving a festival-driven increase in demand could raise both prices and quantities. The same direction of prices therefore need not identify the underlying cause.
ORIGINAL EDUCATIONAL PRACTICE
Try it before you check.
With unchanged demand, what combination is consistent with the illustrated adverse supply shock?
Show the answer and reasoning
Higher prices and lower traded quantity.
The disruption reduces supply at each price. With the stated demand assumption, the new market outcome generally combines a higher price with lower quantity. This differs from a demand expansion, which can raise both. The reasoning is a simplified comparative-statics exercise rather than a complete explanation of any actual food-price episode.
Two traps to watch for.
- Inferring excess demand solely from a price increase.
- Assuming supply shocks affect prices without affecting quantities.
YOUR TOPIC-SPECIFIC LEARNING MAP
Learn from the attempt
Identify the initial demand or supply disturbance.
State which other conditions are held fixed.
Compare predicted price and quantity directions together.
Explain the idea, apply it to a new situation, then check what changed in your reasoning.
BANKERS TUTORIAL · SOURCE NOTES
Keep the source alongside your notes.
Official links provide subject context and authoritative reference material. This guide’s explanation, scenario and question are original Bankers Tutorial learning content.
- ncert.nic.in https://ncert.nic.in/textbook.php?leec1=ps-6
- rbi.org.in https://rbi.org.in/scripts/PublicationsView.aspx?Id=18086
For RBI preparation, check the current official notice before relying on changing dates, rules or examination requirements.
