In a perfectly competitive market, assume the demand and supply equations of commodity Y as follows:
qD = 500 – p
qS = 350 + 2p
What will be the algebraic expression for excess supply?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: 3p-150
Excess supply can be derived by subtracting demand from supply.
So, Qs-Qd = 350+2p – (500 – p)
= 350 + 2p -500 + p
= 3p - 150