Suppose that there are only 2 firms in the entire market. Their supply curves are given as follows:
S1(p) = 0, if p< 10 and
S1(p) = p-10 , if p>= 10
S2(p) = 0 , if p=15
S2(p) = (p-15), if P>15
Market supply for price , p = 15 will be ______.
Answer & explanation
Correct answer: option 4
The correct answer is Option 4: Sm(p) = 5
At price equal to 15, only the first firm will supply the product because the supply of other firm is 0 at this price (15) as mentioned in the question itself.
Thus, at P =15,
Sm(p) = Supply of Firm 1 + Supply of Firm 2
= (p-10) + 0
= 15- 10 + 0
= 5