A market has two firms. Firm 1 supplies q = p − 4 units for p ≥ 4 and nothing at lower prices. Firm 2 supplies q = p − 10 units for p ≥ 10 and nothing at lower prices (p is the price in rupees). At what market prices will the market supply be 5 units and 14 units, respectively?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs 9 and Rs 14
Given: Firm 1 supplies p − 4 for p ≥ 4. Firm 2 supplies p − 10 for p ≥ 10.
Market supply is the sum of the two firms’ supplies at each price. Below Rs 10 only firm 1 supplies.
For p from Rs 4 to below Rs 10: market supply = p − 4
For p ≥ Rs 10: market supply = (p − 4) + (p − 10) = 2p − 14
Supply of 5 units: p − 4 = 5, so p = Rs 9 (below Rs 10, so only firm 1 supplies)
At Rs 10 the market supplies only 6 units, so 14 units needs p ≥ 10: 2p − 14 = 14, so p = Rs 14
Using firm 1’s supply alone for 14 units gives Rs 18, which leaves out firm 2’s output. Using 2p − 14 for 5 units gives Rs 9.5, but at that price firm 2 does not supply yet.
NCERT (2026-27): “4.6 Market Supply Curve … 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. … Now, the market supply curve, Sm(p), simply sums up the supply curves of the two firms; in other words Sm(p) = S1(p) + S2(p)” |