Question

# The diagram shows a price-taking bakery's marginal and average cost curves, and its isoprofit curves. The current

market price for bread is P*= 2.50. Which of the following statements is correct?

Select one:

a. The bakery maximises its profits when the price is equal to the average cost.

b. The bakery's profit is 200.

c. The bakery's supply curve is horizontal.

d. If the market price rises to 3.70, the bakery's profit increases to 200.

e. The bakery maximises its profits by supplying 160 loaves.

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