A bakery is one of many that operate in the bread industry. The market demand curve for bread is downward-sloping. The bakery in

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3 years ago

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A bakery is one of many that operate in the bread industry. The market demand curve for bread is downward-sloping. The bakery in

curs fixed costs and has an upward-sloping marginal cost curve. Which of the following statements is correct?
a.The bakery can raise the market price by constraining its production.
b.The bakery always makes a positive economic rent.
c.The bakery's supply curve is horizontal.
d.The bakery faces a flat demand curve.

Business

1 answer:

RoseWind [281] · Answer 1 · 2022-01-24T23:24:28+03:00

Answer: (d.)The bakery faces a flat demand curve.

Explanation:

The bakery faces a flat demand curve because a firm in a perfectly competitive market is a price taker and the demand curve for a firm is equal to the price the supply curve is a part of Marginal cost above Average variable cost , so the supply curve is upward sloping . The bakery is in the perfectly competitive market so it can earn positive, negative or zero economic profit in the short run and zero economic profit in the long run.