A market has two firms. Firm 1 supplies S1 = p − 5 for p ≥ 5 and zero for p < 5. Firm 2 supplies S2 = 2p − 20 for p ≥ 10 and zero for p < 10 (p in rupees). Consider the following statements:
(A) At a price of Rs 8, market supply is 3 units.
(B) At a price of Rs 12, market supply is 11 units.
(C) For prices from Rs 5 to below Rs 10, market supply is 3p − 25.
(D) At a price of Rs 15, market supply is 30 units.
(E) For prices of Rs 10 and above, market supply is 3p − 25.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (E) only
Market supply at a price = firm 1’s supply + firm 2’s supply at that price. Firm 1 starts at Rs 5, firm 2 only at Rs 10.
(A) At a price of Rs 8, market supply is 3 units. — Correct. S1 = 8 − 5 = 3; firm 2 supplies 0 below Rs 10. Total = 3.
(B) At a price of Rs 12, market supply is 11 units. — Correct. S1 = 12 − 5 = 7; S2 = 24 − 20 = 4. Total = 11.
(C) For prices from Rs 5 to below Rs 10, market supply is 3p − 25. — Incorrect. Here only firm 1 supplies, so market supply is just p − 5.
(D) At a price of Rs 15, market supply is 30 units. — Incorrect. S1 = 10 and S2 = 30 − 20 = 10, so the total is 20 units, not 30.
(E) For prices of Rs 10 and above, market supply is 3p − 25. — Correct. Both firms supply: (p − 5) + (2p − 20) = 3p − 25.
NCERT (2026-27): “4.6 Market Supply Curve The market supply curve shows the output levels (plotted on the x-axis) that firms in the market produce in aggregate corresponding to different values of the market price (plotted on the y-axis). … 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.” “4.6 Market Supply Curve … The interpretation of S2(p) is identical to that of S1(p), and is, hence, omitted. Now, the market supply curve, Sm(p), simply sums up the supply curves of the two firms; in other words
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