The market demand curve and the market supply curve of bajra are given by:
qD = 450 – p for 0<p<450
qS = 150 + p
At price = 200, there will be?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Excess supply
Putting p = 200 in demand equation and supply equation one by one.
Qd = 450 – p = 450 – 200 = 250
Qs = 150 + p = 150 + 200 = 350.
Since supply is greater than demand, there will be excess supply at the price of 200.