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.