Zoe's Bakery Operates in a Perfectly Competitive Industry and Has

question 328

Multiple Choice

Zoe's Bakery operates in a perfectly competitive industry and has standard cost curves.The variable costs at Zoe's Bakery increase,so all of the cost curves (except fixed cost) shift upward.The demand for Zoe's pastries does not change,nor does the firm shut down.To maximize profits after the variable cost increase,Zoe's Bakery will _____ its price and _____ its level of production.

• A)raise;increase
• B)decrease;increase
• C)raise;decrease
• D)do nothing to;decrease

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Definitions:

Arbitrage

The practice of buying and selling the same asset in different markets to profit from price discrepancies without any risk.

Uniform Pricing

A strategy where a business charges the same price for a product or service in all markets regardless of local economic conditions.

Direct Price Discrimination

A strategy in pricing where the seller sets varying prices for the identical product or service, depending on how much each customer is prepared to pay.

High-End Wok

A premium quality cooking utensil designed for stir-frying and other cooking methods, often featuring superior materials and craftsmanship.