Read the following passage and answer the questions.
Suppose there is a market consisting of identical firms producing the same quality of salt.
Suppose the market demand curve and the market supply curve for salt are given by:
$Q_D=350-p$ for $0 ≤ p ≤ 350$
= 0 for p > 350
$Q_S = 220 + p$ for $p ≥10$
= 0 for 0 ≤ p < 10
Where $Q_D$ and $Q_S$ denote the demand for and supply of salt (in kg) respectively and p denotes the price of salt per kg in rupees.
Which of the following expressions will be used for calculating excess supply of salt in the market?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → $2(p - 65)$
$Q_D=350 - p$
$Q_S = 220 + p$
Excess Supply = $Q_S-Q_D$
= 220 + p - (350 - p)
= 2p - 130
= 2 (p - 65)
*****