A market has two firms. Firm A supplies q = p − 20 units for p ≥ 20 and zero units for p < 20. Firm B supplies q = 2(p − 35) units for p ≥ 35 and zero units for p < 35 (p in rupees). Which of the following is correct?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Only firm A supplies for prices from Rs 20 to below Rs 35, and market supply at Rs 40 is 30 units.
Market supply at a price is the sum of what each firm supplies at that price.
Firm B supplies nothing below Rs 35. So for prices from Rs 20 to below Rs 35, only firm A supplies.
At Rs 40:
Firm A = 40 − 20 = 20 units
Firm B = 2(40 − 35) = 10 units
Market supply = 20 + 10 = 30 units
20 units counts firm A alone and leaves out firm B.
NCERT (2026-27): “4.6 Market Supply Curve The market supply curve shows the output levels (plotted on the x-axis) that firms in the market produce in aggregate corresponding to different values of the market price (plotted on the y-axis). … Consider a market with n firms: firm 1, firm 2, firm 3, and so on. Suppose the market price is fixed at p. Then, the output produced by the n firms in aggregate is [supply of firm 1 at price p] + [supply of firm 2 at price p] + … + [supply of firm n at price p]. In other words, the market supply at price p is the summation of the supplies of individual firms at that price.” “4.6 Market Supply Curve … The interpretation of S2(p) is identical to that of S1(p), and is, hence, omitted. Now, the market supply curve, Sm(p), simply sums up the supply curves of the two firms; in other words
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