A Bakery Has to Set the Price of Its Sourdough

question 67

Multiple Choice

A bakery has to set the price of its sourdough bread.Which of the following is a psychological factor relevant to the pricing decision of the baker?

• A)How many loaves of bread will a potential buyer consume every month?
• B)Are the orders coming from households or sandwich shops?
• C)Will a low price indicate inferior quality to a potential buyer?
• D)How many potential buyers for sourdough bread are out there?

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Definitions:

Diseconomies of Scale

An economic concept referring to a situation where, as a firm expands, the costs per unit increase.

Long-Run Average Total Cost Curve

A graphical representation that shows the lowest average total cost at which a firm can produce any given level of output in the long run, where all inputs are variable.

Downward-Sloping

A term often used in economics to describe a curve or line that represents a decrease in one variable as another increases, typical in demand curves.

Long Run

A period in which all factors of production and costs are variable, allowing for adjustment to changes.