The Demand Function for Coffee Was Q = 381 -

question 37

Essay

The demand function for coffee was q = 381 - 3p and the supply function was q = 5 + 7p where p is the price in dollars and q is kg. The government made it illegal to sell coffee for a price above $32 per kg. To avoid shortages, they agreed to pay coffee traders enough of a subsidy for each lkg of coffee so as to make supply equal demand. How much would the subsidy per kg have to be?

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Definitions:

Complete Performance

The full and exact fulfillment of all terms and conditions as outlined in a contract or agreement.

Unconditional Offer

An offer made by one party to another that requires no additional conditions or stipulations to be met for acceptance.

Tender

An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so.

Tendered

Offered formally or presented for acceptance, like a payment or a resignation.