Directions (01- 05): Read the following passage carefully and answer the questions given below it.
In a poor country like India, as income rises people first concentrate on increasing their consumption of what they regard as basic or more essential consumer goods. For the poor, these goods would primarily include cereals and for people at successive levels of higher income protective foods, simple non-food consumer goods, more modern, better quality non-food consumer goods and simple consumer durables, better quality consumer goods, and so on. When the demand for basic and more essential consumer goods is more or less met, demand for the next higher level of consumer goods begins to impinge on consumer decision making and their consumption increases. There is thus a hierarchy of income levels and a hierarchy of consumer goods. As incomes rise and one approaches the turning point referred to, there is an upward movement along the hierarchy in the demand for consumer goods which exhibits itself in a relative increase in the demand for these goods.
If one examines the past consumption behavior of households in India, one finds confirmation of the proposition just made. Until the mid-seventies one notices a rise in the proportion of consumption expenditure on cereals, and thereafter, a steady decline reflecting a progressive increase in the relative expenditure on non-cereal or protective foods. About the same time the rising trend in the share of food in total consumption expenditure also begins to decline, raising the proportion of expenditure on non-food consumer goods. Simultaneously one also notices a sharper rise in the proportion of expenditure on consumer durables. Thus, what one sees is an upward movement in consumer demand along the hierarchy of consumer goods which amounts to a major change in consumer behavior. There are two features of this change to which attention particularly needs to be drawn.
If we examine the price behavior of food items over the past several years, we find that the prices of protective foods (edible oils, pulses, sugar, meat, fish etc.) have been rising more sharply than those of cereals on account of an inadequate supply response to the increase in demand. This is particularly unfortunate because it affects the poorer segments of the population, whose need to increase consumption of protective foods is being thwarted by an excessive rise in prices. In the Approach to the Seventh Plan, importance was given to edible oils, pulses and some of the other protective foods but the overall impression created was that food grains still hold the center of the stage. Whereas it is important to meet the demand for agricultural inputs to sustain the impetus of food grain production and to reduce the regional imbalance in agriculture development, the thrust of agricultural policy now must be more on increasing availability of protective food at reasonable prices.
1. As income rises in a poor country like India, the poor people concentrate on increasing their consumption of
(a) protein foods
(b) modern, non-food consumer goods
(c) cereals
(d) protective foods
2. Whenever there is a decline in the proportion of consumption expenditure on cereals
(a) it reflects an increase in the expenditure on non-cereal protective foods.
(b) it does not reflect an increase in the expenditure on non-cereal or protective food.
(c) it reflects a further increase in the expenditure of cereal foods.
(d) Both (a) and (b)
3. For the poor, the basic consumer goods include items like
(a) edible oils and pulses
(b) non-cereal protective food
(c) meat and fish
(d) cereals
4. Prices of protective food have risen because
(a) prices of cereals have come down.
(b) there is no agricultural development.
(c) there is inadequate supply to demand.
(d) price of non-cereal food has come down.
5. In the approach to the seventh plan, the overall impression was that priority should be given to
(a) food grains
(b) protective foods
(c) non-food products
(d) the identification of consumer behaviour
Correct Answers with Explanations:
1. Ans. (c)
Sol. Refer the first two sentences of the passage “In a poor country like India, as income rises people first concentrate on increasing their consumption of what they regard as basic or more essential consumer goods. For the poor, these goods would primarily include cereals and for people at successive levels of higher income protective foods, simple non-food consumer goods, more modern, better quality non-food consumer goods and simple consumer durables, better quality consumer goods, and so on.”
2. Ans. (a)
Sol. Refer the second sentence of the second paragraph “Until the mid-seventies one notices a rise in the proportion of consumption expenditure on cereals, and thereafter, a steady decline reflecting a progressive increase in the relative expenditure on non-cereal or protective foods.”
3. Ans. (d)
Sol. Refer the first few lines of the first paragraph “For the poor, these goods wouldprimarily include cereals and for people at successive levels of higher income protective foods, simple non-food consumer goods, more modern, better quality non-food consumergoods and simple consumer durables, better quality consumer goods, and so on.”
4. Ans. (d)
Sol. Refer the first few lines of the first paragraph “For the poor, these goods would primarily include cereals and for people at successive levels of higher income protective foods, simple non-food consumer goods, more modern, better quality non-food consumer goods and simple consumer durables, better quality consumer goods, and so on.”
5. Ans. (a)
Sol. Refer the second last sentence of the passage “Approach to the Seventh Plan, importance was given to edible oils, pulses and some of the other protective foods but the overall impression created was that food grains still hold the centre of the stage”.
