A bakery shop produces cakes in a perfectly competitive cake market
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A bakery shop produces cakes in a perfectly competitive cake market

Question 2

A bakery shop produces cakes in a perfectly competitive cake market.


a. Fill in the missing values in the table

b. Suppose the equilibrium price in the cake market is $12. How many cakes per day should the firm produce, and how much profit per day will the firm make?

Hint
EconomicsEquilibrium: It is the state where the market supply and demand balance each other, and therefore as a result the prices become stable. Also, the over-supply of goods or services usually causes the prices to go down, that also results in the higher demand, therefore an under-supply or shortage causes prices to go up those results in the lesser demand....
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