Assume There Are Three Bakeries, Each Willing to Sell One

question 84

Multiple Choice

Assume there are three bakeries, each willing to sell one dozen cupcakes in a given time period. The Sweet Treat can offer a dozen cupcakes for a minimum of $6. The Cake Corner can offer a dozen cupcakes for a minimum of $9. Pastry Place can offer a dozen cupcakes for a minimum of $13.If the market price of one dozen cupcakes increased from $8 to $12:

• A) The Sweet Treat's producer surplus would increase by $6.
• B) Pastry Place's producer surplus would increase by $1.
• C) The Cake Corner's producer surplus would remain unchanged.
• D) All of these statements are true.

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Definitions:

Marginal Product

The rise in output due to an extra unit of input.

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Marginal Profit

The rise in earnings achieved by selling an extra unit of a product or service.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.