A Baker Wants to Establish a Pie Factory

question 60

Multiple Choice

A baker wants to establish a pie factory. The cost of leasing the factory is $1,000 per day. The profit maximizing quantity of pies is 1,000 pies a day. Each pie sells for $3 and costs only $2.10 to make. Which of the following is a correct conclusion based on this data?

• A) The baker will enjoy profits of $900 per day.
• B) The baker should not enter the industry.
• C) At the profit-maximizing quantity, the baker's producer surplus is -$200.
• D) The baker will enjoy profits of $3,000 per day.

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Definitions:

Receding Axis

An imaginary line that moves away from the observer, often used in technical drawing to illustrate depth or perspective.

True Size

The accurate, intended size of a feature as defined by its dimensions without any tolerance applied.

Oblique Pictorial

A form of pictorial drawing in which the object is presented at a tilt to reveal details, with one face shown in true scale and the others angled.

Receding Axis

An axis that appears to move away or diminish in size in a perspective drawing or model.