A Baker Wants to Establish a Pie Factory

question 48

Multiple Choice

A baker wants to establish a pie factory. The cost of leasingthe factory is $1,000 per day. The profit maximizing quantityof 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 conclusionbased on this data?

• A)The baker will enjoy profits of $900 per day.
• B)The baker should not enter the industry.(True Answer )Correct
• 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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