The Demand Function for Orange Juice Is Q = 247

question 10

Multiple Choice

The demand function for orange juice is q = 247 - 8p and the supply function is q = 19 + 4p, where q is the number of units sold per year and p is the price per unit, expressed in dollars.The government decides to support the price of orange juice at a price floor of $27 per unit by buying orange juice and destroying all that it has purchased.How many units must the government destroy per year?

• A)105
• B)104
• C)40
• D)96
• E)101

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Definitions:

Convertible Stock

Equity securities that can be converted into a predetermined number of common shares, at the option of the holder.

Callable Stock

A type of security that gives the issuer the right to buy back the shares at a predetermined price after a certain period.

Noncumulative Stock

Preferred stock where dividend payments are not accumulated if they are not declared, meaning shareholders may lose the right to dividends in missed payment periods.

Statement Of Stockholders' Equity

A financial statement showing changes in a company's equity, including net income, dividend payments, and stock issues or repurchases, over a period.