A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most

attractive?
a. Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen.
b. Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen.
c. Throw the bagels away and produce 8 fewer dozen bagels tomorrow.
d. Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.


a

Economics

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