# AP Board 9th Class Social Studies Solutions Chapter 10 Prices and Cost of Living

SCERT AP Board 9th Class Social Solutions 10th Lesson Prices and Cost of Living Textbook Questions and Answers.

## AP State Syllabus 9th Class Social Studies Solutions 10th Lesson Prices and Cost of Living

### 9th Class Social Studies 10th Lesson Prices and Cost of Living Textbook Questions and Answers

Question 1.
Why is there a need to regulate prices?

• Trades main aim is to earn profit, raise prices of many goods and particularly essential items by illegal ways.
• If there is no increase in wage for workers who are also consumers in the market, they cannot buy the goods.
• When these goods happen to be essentials such as wheat, rice, milk etc., this creates problem for the people.
• This necessitates the need for regulation of traders to regulate prices.

Question 2.
How are prices fixed by a seller/producer?

• The traditional economic theories of pricing were based on the demand and the supply.
• In general the prices are fixed on the basis of full average cost of production per unit plus a margin of normal profit or some satisfactory margin of profit.
• Producer sells the goods to the seller.
• Seller in turn adds his profits and fixes the prices.

Question 3.
Differentiate the cost of living from the standard of living.

 Cost of Living Standard of Living 1. The total costs of all goods and services purchased in a family for a specific period is the cost of living of the family. 1. The quality of life that the people enjoy is the standard of living of the people. 2. Inflation and cost of living are positively related. 2. Inflation and standard of living are inversely related. 3. That means if inflation increases, the cost of living too increases. 3. That means if inflation increases, the standard of living decreases.

Question 4.
Who is affected the most by increase in cost of living? Why?

• People with fixed incomes, such as pensioners, daily wage earners, manual workers, small vendors, workers in small enterprises and in private low income jobs etc., are badly affected by increase in cost of living.
• These people’s income does not increase when there is inflation.

Question 5.
Which groups can get higher incomes whenever there is inflation?
Not everyone is affected by rising prices. For some groups this rise in price levels is compensated. They are –

1. People working in central and state government offices and in some organizations get an additional payment called “Dearness Allowance” whenever prices rise. Therefore their income increases, along with inflation.
2. People doing business activities recover the higher cost of living by increasing the prices of goods they sell.
3. People providing services such as lawyers, doctors etc., increase their fees when prices increase.
4. Extremely rich people and those working in corporate sector are less affected by rising prices.

Question 6.
How is Wholesale Price Index different from Consumer Price Indices?
Change in price is measured with the help of a statistical device referred to as “Price Index”. Price Index is of two types. They are –

1. Consumer Price Index
2. Wholesale Price Index
 The Consumer Price Index The Wholesale Price Index 1. The CPI measures only changes in prices of a few selected consumer goods at retail price. 1. The Wholesale Price Index includes all goods and changes in their wholesale rates. 2. Different CPIs are published by government. 2. There is only one wholesale price index. 3. The CPIs are used to calculate the DA to be paid for government employees. 3. The inflation is generally measured on the basis of changes in WPI.

Question 7.
How is food inflation different from Consumer Price Indices?

• CPI measures only changes in prices of a few selected consumer goods at a retail price.
• Different CPIs are published by the government.
• Whereas FPI (Food Price Index) is used to estimate rise in prices of food items called food inflation.
• The FPI consists wholesale price of food materials such as rice, wheat, pulses, vegetables, sugar, milk, eggs, meat, fish, and manufactured food materials such as edible oils.

Question 8.
What are the uses of the CPI?
The CPIs are used to calculate the DA to be paid for government employees, to revise legal wage rates as part of Indian government laws and also to estimate the number of poor in India.

Question 9.
List of five problems with measuring CPI.
(OR)
Write any five issues that are considered while measuring CPI.

• There are thousands of goods and services in the economy.
• Only selected consumer goods and changes in these goods are taken by the government to calculate CPI.
• Both quality and quantity of goods consumed keeps varying from time to time.
• Difficult to calculate CPI as the price levels vary from state to state.
• Even food habits keep varying among people.

Question 10.
How is Administrative Price Mechanism (APM) different from Minimum Support Price (MSP)?

 Administrative Price Mechanism Minimum Support Price 1. Under APM, a price is fixed and it is mandatory for the traders to sell their goods at that price level in the market. 1. A minimum support price is a price at which the farmers can sell their grain to the government. 2. It is compulsory for traders to follow the APM. 2. It is not compulsory for farmers to sell their goods at MSP 3. It helps in preventing hoarding and keeps the prices of essential commo­dities within reasonable levels. 3. It helps the farmers to gain their  of cost cultivation plus a minimum profit  on the production

Question 11.
Read sixth paragraph under the heading ‘Role of Government in Regulating Prices’ and answer the question.

 For preventing hoarding and keeping the prices of essential commodities within reasonable levels, and to facilitate their availability, the government fixes the prices and makes it mandatory for the traders to sell goods in the market at those price levels. Those who do not follow stipulated price levels are penalised by government through various laws. Goods such as kerosene, diesel, Liquid Petroleum Gas, Compressed Natural Gas and Piped Natural Gas are examples of goods whose prices are partly or solely subsidised by the government and sold under Administrative Price Mechanism.

How does the APM affect the government revenue? Discuss.

• Goods like Kerosene, Diesel, LPG, CNG and piped Natural Gas are subsidised by the government. .
• Under subsidised scheme the government purchases the goods at high prices and sells them at low prices.
• The loss is the subsidy and the. government bears the loss.
• Government is now 3% of its expenditure on subsidies.

Question 12.
Take any five goods or services used by your family and construct a Consumer Price Index for your family based on these five goods/services.

Question 13.
Write True or False against the statement given below.
1) Inflation increases the standard of living of the people. [ ]
2) Value of money is shown by changes in its purchasing power. [ ]
3) Change in cost of living does not affect the standard of living of pensioners [ ]
4) Central Government workers are compensated for inflation by rise in DA. [ ]
5) WPI measures changes in the price level of only consumer goods. [ ]

1. False
2. True
3. False
4. True
5. False

Question 14.
The following table shows the wholesale Price Indices of Industrial Goods. Prepare a line diagram answer the questions that follow.

1.Which commodity’s price rose steeply over the years?
Cement prices rose steeply.

2. What could be the reasons for a slow rise in the price of cotton cloth and fertilizers?

• Demand of cotton is stable and price level are also stable.
• Government gives subsidies to the fertilizers. Hence prices are slowly increasing.

Question 15.
Write a letter to your Tehsildar on proper maintenance of Public Distribution System by indicating your suggestions.

 To The Tehsildar, Kaikalur Mandal, KAIKALUR.From, A.M. Bindu Madhavi, IX Class, Harsha Public School, Singh Nagar, Kaikaluru.Sir, We reside in Singh Nagar in Kaikalur near Mahalakshmi temple. Our ration shop number is 107/52. As we are white card holders, we are eligible for rice and other provisions. We are receiving the ration very late.The rice supplied is spoiled and wet. And we receive rice in less quantity also. We gave complaint many times to local authorities but invain. So kindly look into the matter otherwise our food security right will be violated. This is for your kind information and necessary favourable action. Thanking you Sir, Yours faithfully A.M. Bindu Madhavi, IX standard.

### 9th Class Social Studies 10th Lesson Prices and Cost of Living InText Questions and Answers

Question 1.
Price of Cotton and Rice (per quintal) during 2005-2011

(i) Calculate the index numbers of rice and cotton by assuming 2005-06 as the base year.
(ii) Draw a line diagram showing index number of rice and cotton. Keep the years in x-axis and index numbers on the y-axis. Discuss how the line goes up over the years. (Text Book Page No. 123)
(i) Index numbers of rice
The value: of the index = 100; Original index value is = 600; In 2005-06 = $$\frac{600}{600}$$ × 100 = 100%

ii)

There is a slight increase in rice from 2005-06 to 2006-07 and from here there is huge increase up to 2010-2011. Incase of cotton, from 2005-06 to 2006-08 there is a slight increase and from 2007-08 to 2008-09 there is a huge increase and from 2008-09 to 2010-11 the price is constant.

Question 2.
Tomorrow is Teacher’s Day. Your class students give you Rs.200 and send you to the market to buy some sweets and biscuits to celebrate this day with your teachers. When you go to the shop, you find that the price of a sweet packet is Rs. 60, and a biscuit packet is Rs. 20. If you buy 2 sweets packets, how many biscuit packets can you buy ? How much should you pay ? (Text Book Page No. 121)
If we buy 2 sweet packets:
The cost of two sweet packets = 2 × 60 = 120
Remaining Amount = 200 – 120 = 80
No. of Biscuit packets we can buy = $$\frac{80}{20}$$ = 4
Total Amount we paid = 200

Question 3.
Why did you buy such few packets? (Text Book Page No. 121)
Prices of the goods have gone up and for the same amount of money i.e., Rs. 200/- we can buy lesser amounts of these commodities.

Question 4.
Suppose your classmates asked you to buy 5 packets of both sweets and biscuits this year also. How much would you have to pay then? (Text Book Page No. 121)
For 5 packets sweets (5 × 60) = Rs. 300
For 5 packets biscuits (5 × 20) = Rs. 100
Total amount you pay = Rs. 400

Question 5.
How much more do you have to pay compared to last year? (Text Book Page No. 121)
Total amount this year spent = Rs. 400
Total amount last year spent = Rs. 200
Excess amount paid = Rs. 200

Question 6.
Recent price increases : (Text Book Page No. 126)
During 2009-12, prices of many essential goods went up. You can see this from the following figures. Look at the figure carefully and answer the questions that follow.

1) If a family was buying rice for Rs. 20 a kg in 2005-06, how much would if have to pay in 2011?
2) In which years did the price of pulses increased considerably?
3) What is the percentage increase in the price of cotton?
4) Which commodity price has been more or less stable?