Question
In a small market, there are two suppliers of wedding cakes. One bakery incurs costs of $50 per cake, of which $40 is variable, and
In a small market, there are two suppliers of wedding cakes. One bakery incurs costs of $50 per cake, of which $40 is variable, and the other bakery incurs costs of $75 per cake, of which $60 is variable. Each bakery can supply 300 cakes. Consumers demand 700 cakes, with 150 consumers willing to pay up to $200 for a cake, 300 consumers willing to pay up to $150 for a cake, and 250 consumers willing to pay up to $100 for a cake. (No consumers want to purchase more than one cake.)
Assuming the two suppliers produce identical cakes, which of the following options could be the outcome in the market?
450 cakes are sold at a price of $150 per cake.
600 cakes are sold at a price of $100 per cake.
700 cakes are sold at a price of $60 per cake.
700 cakes are sold at a price of $100 per cake.
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