Consider a market consisting of two farms producing same quality of wheat. The market demand curve and the market supply curve for rice are given by:
qD = 250 – p
qS = 150 + p
At price of Rs. 25, by how much will demand be greater than supply?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: 50
qd =250-p = 250 – 25 = 225
qs = 150 + p = 150 + 25 = 175
qd - qs = 225 – 175 = 50
Thus, at Rs. 25, the demand will be greater than supply by 50 units.