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2025 PEA Q23

Bharat: linear demand, zero above p=5p=5. Chinmayi: linear demand, zero above p=10p=10. Market demand kink and flatness?

Reveal answer and solution

Answer

A

Solution

  1. 1

    For p∈(5,10]p \in (5,10], only Chinmayi buys, so market demand has Chinmayi's slope. For p∈[0,5]p \in [0,5], both buy, so market demand is the horizontal sum --- a flatter (more elastic in QQ) curve. The two segments join at p=5p = 5.

Answer structure / marking notes

``Flatter'' in price-quantity space means small change in pp produces a large change in QQ. Adding a buyer always flattens the curve in the relevant range.

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Content note

Imported from public/resources/isi/msqe/solutions/pea/2025/ISI_MSQE_PEA_2025_Solutions.tex. Question wording is retained from the available local TeX source; incomplete option blocks or ambiguous source status are flagged for review.