Read the following passage and answer the questions.
Suppose there is a market consisting of identical firms producing the same quality of salt.
Suppose the market demand curve and the market supply curve for salt are given by:
$Q_D=350-p$ for $0 ≤ p ≤ 350$
= 0 for p > 350
$Q_S = 220 + p$ for $p ≥ 10$
= 0 for 0 ≤ p < 10
Where $Q_D$ and $Q_S$ denote the demand for and supply of salt (in kg) respectively and p denotes the price of salt per kg in rupees.
Find the equilibrium price of salt in this market.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs 65
$Q_D=350 - p$
$Q_S = 220 + p$
At equilibrium, $Q_D=Q_S$
350−p = 220+p
130 = 2p
p = 65