Assume There Are Three Bakeries, Each Willing to Sell One

question 45

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 $7 to $10:

• A) total surplus would decrease by $5.
• B) Pastry Place's producer surplus would decrease by $3.
• C) total surplus would increase by $4.
• D) The Cake Corner's surplus would increase by $3.

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Definitions:

Inventory Turnover

Inventory Turnover is a ratio that shows how many times a company's inventory is sold and replaced over a period.

Accounts Receivable Collection

The process of recovering funds that are due from customers who have purchased goods or services on credit.

Customer Discount

A reduction in the price of goods or services offered to buyers, often used as a sales promotion strategy.

Marketable Securities

Assets that can be rapidly turned into cash at an acceptable value.