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- No. It keeps changing, because market conditions keep changing.
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Example 1
- Tomatoes sell at Rs 30 per kg.
- Heavy rain damages the crop.
- Supply falls, and the price rises to Rs 100 per kg.
- A few weeks later, the new crop arrives.
- Supply rises, and the price comes back down.
- So a change in market conditions changed the equilibrium point.
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Example 2: Face masks during COVID-19
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In 2020, the COVID-19 pandemic began.
- A pandemic is a disease that spreads across the whole world.
- The demand for face masks rose very fast.
- Supply could not catch up immediately, so the price of masks rose a lot.
- Over time, suppliers made more masks, and prices fell.
- After the pandemic, demand fell further, and prices went back to pre-pandemic levels.
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In 2020, the COVID-19 pandemic began.
| Time | What happened | Price of face masks |
|---|---|---|
| Start of the pandemic, 2020 | Demand rose very fast; supply could not catch up | Rose a lot |
| Over time | Suppliers made more masks | Fell |
| After the pandemic | Demand fell further | Back to pre-pandemic levels |
- In theory, equilibrium is one fixed point where demand and supply cross.
- In the real world, markets are dynamic , meaning conditions keep changing.
| Factor | Example |
|---|---|
| Technology | A new phone model is launched with better features. Demand for the older model falls, and its price drops. |
| Wages (pay for work) | Workers in a city get a pay rise. They spend more, so demand for clothes and phones rises. |
| Interest rates (the extra paid on a loan) | Interest rates on loans fall, so loans become cheaper. More people take loans to buy cars and houses, so demand rises. |
| Wars and political events | A war blocks the transport of oil from other countries. Oil supply falls, and petrol prices rise. |
| Pandemics | During COVID-19, everyone wanted masks at the same time. Demand shot up, and prices rose before supply could catch up. |
| Weather and natural disasters | A flood destroys crops in a region. Vegetable supply falls, and prices rise. |
- So in the real world, equilibrium is never stable . It keeps moving. The market is always adjusting to a new equilibrium , and never fully settles at the old one.
- Hotels change their room price ( tariff ) with demand and season.
- Example - A hotel in Goa:
| Day | Demand | Tariff per night |
|---|---|---|
| Monday in July (off-season) | Low | Rs 1,500 |
| Saturday in December (tourist season) | High | Rs 8,000 |
| New Year's Eve | Very high | Rs 25,000 |
- If a booking is cancelled, the hotel may cut the tariff by 40% to fill rooms quickly.
- Tariffs can change several times a day to earn the most revenue (total money earned from sales, before expenses).
- Other things that change the tariff - how fast rooms are booked, nearby hotels' prices, local events, weather and past booking trends.
Question: Can you think of another real-life example (other than hotels) where prices change frequently? Explain why the prices keep changing.
Sample answer: petrol prices in India
- The price of petrol in India keeps changing, because India imports most of its crude oil (from which petrol is made). A large share comes from the Middle East.
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War affects supply
- sometimes a war disrupts oil supply, so the price rises.
- Example - In 2026, a war involving Iran blocked a key sea route for oil, and petrol prices in India went up. (Beyond the textbook: current news, position as of September 2026.)
- Government taxes change - when the government raises taxes on petrol, the price rises. When it cuts taxes, the price falls.
Question: Our choices today affect future resources. For example, high demand for fast fashion, overfishing and overuse of groundwater can harm future supply. So, should we focus only on short-term gains, or also think about long-term sustainability? How could this affect the market equilibrium?
- We should think about long-term sustainability (using resources so that enough is left for the future), not only short-term gains.
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If we overuse resources today, future supply falls.
- Example - Overfishing leaves fewer fish; overusing groundwater leaves less water for farms.
- With less supply, future prices rise and less is available. The equilibrium moves to a higher price and a lower quantity .
- If we use resources carefully, supply stays steady and prices stay stable.
4. During online festival sales, the prices of many products are very low. Use the concept of demand and supply to explain why the sellers sell at such a low price. What happens to the equilibrium when the price is lowered? Does this benefit only consumers or sellers as well? Explain.
- Why do sellers sell at such a low price? To clear old stock (a surplus) before new models arrive. A lower price makes people buy more (the Law of Demand). The profit on each item is smaller, but far more items are sold.
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What happens to the equilibrium when the price is lowered?
- Lowering the price does not by itself move the equilibrium point.
- The equilibrium point changes only when demand or supply changes.
- If the sale price is below the existing equilibrium price and demand and supply stay the same, quantity demanded becomes more than quantity supplied. This is excess demand , so products may go "sold out".
- Sellers often discount because they already have high stock (excess supply), or as a sales strategy to attract more buyers.
- So the sale benefits both consumers and sellers.
9. Visit the nearby vegetable market and try to find answers to the following questions. a. Who decides the prices of different vegetables in the vegetable market? b. Sometimes the prices of a few vegetables is too high, and sometimes too low. Why is this? c. The price of tomatoes is high in the morning and eventually gets lower by the evening. Have you ever noticed this? Comment.
Sample answer (your market visit may differ):
- a. Who decides the prices? No single person. Prices are set by the interaction of buyers (demand) and sellers (supply). Sellers start from what they paid at the wholesale market, then adjust to how many buyers come.
- b. Why are prices sometimes too high and sometimes too low?
| Situation | Supply | Price |
|---|---|---|
| Good harvest, many trucks arrive | High | Low |
| Heavy rain or heat damages the crop | Low | High |
| Festival or wedding season | Demand high | High |
- c. Why are tomatoes costly in the morning and cheaper by evening? In the morning, the stock is fresh and many buyers come, so the price is high. Vegetables spoil quickly - by evening, sellers want to sell the leftover stock before it goes bad. This leftover stock is a surplus, so sellers cut the price.
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A market where prices keep changing as conditions change.
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In theory, it is one fixed point. In the real world, it keeps moving because demand and supply keep changing.
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Revenue.
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Any three of: technology, wages, interest rates, wars and political events, pandemics, weather and natural disasters.
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False. Demand rose very fast and supply could not catch up, so prices rose.
- In the real world, demand and supply keep changing, so equilibrium is never stable and keeps moving.
- Face masks in COVID-19 and hotel tariffs show prices adjusting as demand and supply change.
- The market is always adjusting to a new equilibrium, and our choices today (like overusing resources) can change future supply and prices.
