In a Certain Kingdom, the Demand Function for Rye Bread

question 37

Multiple Choice

In a certain kingdom, the demand function for rye bread was q = 181 - 8p and the supply function was q = 13 + 6p, where p is the price in zlotys and q is loaves of bread. The king made it illegal to sell rye bread for a price above 6 zlotys per loaf. To avoid shortages, he agreed to pay bakers enough of a subsidy for each loaf of bread so as to make supply equal demand. How much would the subsidy per loaf have to be?

• A) 21 zlotys
• B) 20 zlotys
• C) 14 zlotys
• D) 14 zlotys.
• E) None of the above.

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Definitions:

Administrative Expense

Administrative expense includes overhead costs not directly tied to a specific project or production process, such as salaries of executive staff, office supplies, and utilities.

Direct Labor-Hours

The amount of time spent by workers directly involved in manufacturing a product or delivering a service.

Raw Materials

The basic substances in their natural, modified, or semi-processed states used as inputs for manufacturing processes.

Selling and Administrative Expense

Costs related to the selling of products and the administration of a business.