*The buyers and sellers in this market do not collude.

On the supply side, there are 3 bakers

• each baker's costs are such that MC = AC
• each baker can only supply one cake
• the bakers have different marginal costs: $10, $14, $17

In each scenario (a-d) determine the value or range of values of the equilibrium price will take. Explain. Keep in mind consumer surplus and the profit motive.

a. There is only 1 buyer, who will only buy 1 cake. She has a reservation price of $30.

b. There are 3 buyers who will each only purchase one cake. Their reservation prices are $30, $25, and $18.

c. 2 bakers drop out of the market leaving only the baker with MC = 10. The three buyers from 'b' above form the demand side of the market.

d. Only the baker with MC = 10 remains to supply the market, but the baker has expanded production capacity, so she can supply as many cakes as needed. She acts as a single-price monopolist.

How many cakes will be sold and at what price?