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
You might also like to view...
Assuming all else equal, any change that causes an increase in the credit supply at a given real interest rate will cause:
A) the credit supply curve to shift to the left. B) a downward movement along the credit supply curve. C) an upward movement along the credit supply curve. D) the credit supply curve to shift to the right.
Assume a money multiplier of 2. If the Treasury finances a $10 million expenditure by selling securities to the Fed, bank reserves will
A) remain unchanged. B) rise by $5 million. C) rise by $10 million. D) rise by $20 million.
Compared to the short run, the long-run market supply curve is
a. less elastic b. equally elastic c. more elastic d. always negatively sloped e. None of the answers is correct.
A rational-expectations theorist argues for increased government involvement in the economy to ensure stable price and employment growth.
Answer the following statement true (T) or false (F)