A popular bakery has only a few ingredients left to make its products. It could bake muffins or...
Question:
A popular bakery has only a few ingredients left to make its products. It could bake muffins or cookies, but it can't make both. The bakers decide to make cookies for their customers. What is the opportunity cost of their decision?
Scarcity and Choice:
The social science of economics is based on the condition of scarcity in our world. Humans have unlimited wants but only limited resources to satisfy those wants. Scarcity means that humans much make choices.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerWhen humans make choices, they do so based on opportunity cost. The definition of opportunity cost is what you give up when you make a choice. In this...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Opportunity Cost: Definition & Examples
from
Chapter 1 / Lesson 2
92K
What is Opportunity Cost? Learn the definition and explore real-life examples of this concept. Also, learn the types of opportunity costs and what they represent.
Related to this Question
- A bakery currently sells chocolate chip cookies at a price of $16/dozen. The MC is $8/dozen. The cookies are becoming more popular with customers, and so the bakery owner is considering raising the price to $20/dozen.
- A bakery currently sells chocolate chip cookies at a price of $16 per dozen. The marginal cost per dozen is $8. The cookies are becoming more popular with customers, and so the bakery owner is conside
- Commercial bakeries typically sell a variety of products (bread, rolls, muffins, cakes, etc.) to local grocery stores. There are substantial economies of scale in the production of each one of the bakery products, which makes it cost-effective to speciali
- Mary makes 10 pies and 20 cakes a day and her opportunity cost of producing a cake is 2 pies. Tim makes 20 pies and 10 cakes a day and his opportunity cost of producing a cake is 4 pies. If Mary and T
- Nora is a baker. She bakes muffins using five inputs: flour, sugar, blueberries, electricity (for the oven), and labor. Her costs per muffin are as follows: $0.01 for flour, $0.02 for sugar, $0.03 for blueberries, $0.02 for electricity, and $0.10 for the
- A flour mill produces $1000 worth of flour, of which $700 goes to a bakery and $300 to consumers. A water supplier produces $300 worth of water, of which $200 goes to the bakery and $100 to consumers. The bakery produces $1,500 worth of bread and sells al
- Betty's Bakery bakes fresh bread every morning. Any bread not sold by the end of the day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loa
- Bianca bakes delicious cookies. Her total fixed cost is $40 a day, and her average variable cost is $1 a bag. Few people know about Bianca's Cookies, and she is maximizing her profit by selling 10 bag
- A local bakery is able to obtain ingredients for making baked goods at a lower cost. Is this an example of a change in supply or a change in quantity supplied? Explain.
- At Nick's Bakery, the cost to make homemade chocolate cake is $3 per cake. As a result of selling three cakes, Nick experiences a producer surplus in the amount of $19.50. Nick must be selling his cakes for: a. $6.50 each. b. $7.50 each. c. $9.50 each. d.
- Here is Mrs. Baker's revenue and expenses for 2015: Revenue from sale of bread to customers = $65,000 Cost of materials (such as sugar, yeast, baking soda, etc.) = $15,000 Wages paid = $20,000 Ren
- It takes Althea 20 minutes to make a batch of cookies. It takes her 40 minutes to make a batch of brownies. What is her opportunity cost of baking a batch of brownies?
- Assume that at the price of $5 per pie, customers at the local fair buy 1,000 pies on Friday, and 1,500 pies on Saturday. Assume that there are 4 pie bakeries selling pies at the fair on Friday night and 6 bakeries selling pies on Saturday night. What is
- Betty's Bakery estimates that they can sell 400 cookies at $0.60(60 cents) a cookie and will be able to sell 500 cookies if the price of a cookie drops to $0.50(50 cents).
- At Sarah's Bakery, the cost of making one cake is $1.00. If Sarah sells 20 cakes and gains a producer surplus of $40.00, then Sarah must be selling her cakes for what price?
- At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cake
- Let p(x) = 75 - (x^2 / 4) be the price in dollars per cake that a bakery can charge if they want to sell x cakes. What cake price will maximize revenue? (Recall, revenue is the total amount of money
- Suppose the price of bagels in Allentown is currently $1.05 per bagel. There are 10 low-cost bakeries and 10 high-cost bakeries that can produce bagels, each of which has the supply function low-cost bakery: Qs(low-cost) = 200P - 125 high-cost bakery: Q
- Assume that at the price of $5 per pie, customers at the local fair buy 1,000 pies on Friday, and 1,500 pies on Saturday. Assume that there are 4 pie bakeries selling pies at the fair on Friday night and 6 bakeries selling pies on Saturday night. Assume
- The American Baker's Association reports that annual sales of bakery goods last year rose 15%, driven by a 50% increase in the demand for brain muffins. Most of the increase was attributed to a report
- My family in Portugal runs a "cakery" (it's like a bakery where they only sell cakes). Since I care about my aunts making more money (faster), I keep telling them to raise cake prices. My aunts, on the other hand, tell me raising prices is a sure way to m
- Denea produces cookies. Her production cost is $4 per dozen. She sells the cookies for $9 per dozen. What is her producer surplus?
- The Girl Scouts have a long successful history of selling cookies at inflated prices. Suppose in the area's inverse demand for cookies can be described as follows: P = Y - mQ. Assume the Girl Scouts purchase their cookies from an area bakery at a set pric
- The average cost of making 10 cakes is $2.80. The average cost of making 11 cakes is $3.00. The marginal cost of the 11th cake is A. $0.20 B. $2.00 C. $3.00 D. $5
- Juliette owns a small bakery, where she works full-time baking the bread and pastries she sells. Her total revenue last year was $100,000. Her rent for the bakery was $3,000 a month. She has one clerk, who she pays $2,000 a month. Her ingredients and othe
- Belinda owns a cake store in a small town and is the only business selling cakes. Her marginal cost is constant at $7 per cake. She currently charges $38 for each cake and aims to profit maximise. Below is a table for potential prices Belinda could charg
- A donut shop sells fresh-baked donuts from 5 a.m. until 3 p.m. every day. The shop does not sell day-old donuts, so all unsold donuts are thrown away at 3 p.m. each day. The cost of making and selling a dozen donuts is $1.50; there are no costs associated
- One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00. Taking
- Nicole sells cupcakes. She knows that if she charges $1 per cupcake, she will be able to sell 100 cupcakes. She also knows that if for every 25 cents she raises the price, she will lose ten customers.
- Carla Hesseltine is considering buying a few tablet devices for her bakery so customers can place orders for her signature M&M cupcakes on their own, straight from the counter. The reason: She fears t
- Refer to the table below. Martha's opportunity cost of making a pie is: a) 3/4 of a cake b) 4/3 of a cake c) 8 cakes d) 80 cakes
- Girl Scouts are selling cookies in front of a grocery store. Every other shopper who exits buys a box of cookies (at random). Half of the buyers spend $8 on cookies (two boxes), and the other half spend $4. The store has 1,000 shoppers leaving per day. a.
- What will happen to a bakery if a large retailer like Coles or Woolworths establishes a new store in a location close by and decides to price bread below cost as an opening special to attract customers? What will happen to the bakery if the new retailer c
- A florist decides to leave his job making $40,000 per year to bake and sell pies. He spends $20,000 a year on ingredients and rents space and equipment for $30,000 a year. His sales revenue as a pie maker is $75,000 per year. Assuming this information is
- John is thinking about setting up a doughnut van. The van itself costs $200. The ingredients for each doughnut cost $0.50. a. What is the fixed cost of doing business in the short-run? b. What is the variable cost per doughnut in the short-run? c. Constru
- Currently 10 identical bakeries are producing bread in a competitive market. The cost function for a typical bakery is C_i = 6q_i + 0.01q_i^2 + 100. The demand for bread is q = 1800 - 100p. (a) What
- Jack and Jill have decided to open a bakery together. For reasons nobody understands, Jack can bake as many as 20 pies or ten cakes per day, but Jill can bake only as many as 15 pies or nine cakes. a. Which partner has the comparative advantage in cake b
- The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, she should: a. lower the price of the cinnamon rolls b. leave the price of the cinn
- Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $20
- Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $30
- Sammy's Bakery and Presley's Sweetshop both sell cupcakes. The market price of one chocolate cupcake is $2.50. Sammy's is willing to sell a cupcake for as little as $1.65; Presley's is willing to sell a cupcake for as little as $1.75. What is the total pr
- Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cook's time. Vincent can bake 10 cakes or make 5 pizzas in an hour.
- If Julia knows the average total cost of baking 12 dozen muffins is $6 and the average total cost of producing 13 dozen muffins is $7, then the marginal cost of producing the 13th dozen muffins is a.
- Dan's ice cream shop is a perfectly competitive firm selling 100 ice cream cakes per day. The market price of a cake is $10, AVC is $9 and its AFC is $2. Should Dan continue to produce, increase production, decrease production, or shut down his cake busi
- Trade Sandy and Katrina have an endowment of 10 hours per day they can use to produce cupcakes and cookies. Assume that production schedule is as follows. If Sandy spends all her time baking cupcake
- Janet is planning to make fancy multi-tiered wedding cakes for the next wedding sales. To make the cakes, she must invest $834 in some special pans. To get started, she needs to spend $1,800 to advert
- Jed's Bakery is famous for its large cinnamon buns. The bakery has fixed costs of $100. Jed must pay each worker a wage of $10.00 per hour, and each works an 8-hour shift. He earns $2 for each cinnamon bun that is sold. The following table shows how many
- Currently 10 identical bakeries are producing bread in a competitive market. The cost function for a typical bakery is: Ci = 6qi + 0.01qi^2 + 100. The demand for bread is: q = 1800 - 100p 1. The gove
- Julie sells homemade designer cookies. The marginal cost of producing a cookie depends on how many cookies Julie produces and is given by the formula, MC = 1.2Q. Thus, the first cookie Julie produces
- If loaves of bread went from 1 to 2 pounds in size and from $1 to $2 in price, did the cost of buying bread rise or did people pay more for more bread?
- Mr. Breaux is the owner of a bakery; he had decided to lower the price for all cakes in the month of September. What will be expected to happen? a. The quantity demanded of cakes will decrease. b. The quantity demanded of cakes will increase. c. The marke
- Hull Baking Company uses 250,000 lb of sugar annually in its cakes and pastries. The company can order the sugar in 100 lb bags, at the cost of $19.50 per bag, delivered. The cost of preparing and sending an order is $50. The storage and handling cost amo
- Angela always takes one cup of cookies with one cup of coffee. Cookies cost $2 per cup, and coffee costs $1 per cup. Angela has $12 to spend on cookies and coffee. Consider a price drop in cookies to $1 per cup. Illustrate Angela s optimal consumption bun
- Suppose Mona runs a small cake business from her kitchen (using a small electric oven). She faces an inverse demand of P = 100 -Q/2 for her cakes. Her cost of baking Q cakes is C(Q) = 1/2 Q^2. a. Supp
- You own a home-based bakery that specializes in creating themed cupcake displays for special events. The mortgage payment on your home increases dramatically due to a property tax hike in your community. A) What impact will this have on your average vari
- One bag of flour is sold for $1.50 to a bakery, which uses the flour to bake bread that is sold for $4.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00. Taking these three transactions into account, what is the eff
- A cupcake store is located in a mall and is the only cupcake store in that mall. The demand schedule for cupcakes (per dozen) is given in the table below. If the marginal cost to produce a dozen cupca
- Suppose Jen is the only supplier of both coffee and donuts in Smalltown. The cost of producing the goods is zero. Jen sells coffee for $3 and donuts for $3. In a typical hour, 5 costumers buy just one coffee, 4 buy just one donut, and 3 costumers buy one
- Given the business situation of Mrs. Acres Homemade Pies and using the economic concepts of supply and demand. Shelly Acres, whose grandmother gave her a family recipe for making pies, loved to cook s
- Jenny produces cupcakes. Her production cost is $12 per dozen. She sells the cupcakes for $20 per dozen. What is her producer surplus per dozen cupcakes?
- In 2 hours, Meg can make 3 dozen cupcakes or 2 chocolate cakes. Her friend, Janis, can make 5 dozen cupcakes or 1 chocolate cake. If Meg specializes in cupcakes and Janis specializes in chocolate cakes, the total production of cupcakes will be [{Blank}] a
- A small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a c
- Panera Bread has hired you as a consultant to determine the optimal pricing strategy for its coffee and bagel products. You have determined that Panera has two basic types of customers: those who are
- Taylor makes cake using equipment that she rents for $15 and real carrots and other ingredients that cost $6.22 a slice. She hires workers and finds that they produce cakes according to the following
- Suppose Candy's Cookie Shop is able to produce 1,000 cookies per day when 3 workers are hired. The cookie shop is able to produce 1,200 cookies per day when 4 workers are hired and 1,350 cookies when 5 workers are hired (holding other inputs fixed). The m
- 1. Suzy left her successful law firm to start a bakery. During her first year, she determined that she paid $50,000 in costs and brought in $80,000 of revenue. Is it fair to conclude that her bakery w
- Kathy's Bakery is a local full-service bakery in Omaha, Nebraska. Kathy sells loaves of wheat bread for $3 a loaf. Of this amount, $1.50 is profit contribution. She is considering an attempt to differentiate her shop from several other competitors by only
- Maria manages a bakery, that specializes in ciabatta bread, and has the following information of demand and costs: a. To maximize profits, Maria should sell ____ loaves of ciabatta bread per hour.
- Barb's Bakery made $200 last month selling 100 loaves of bread. This month it made $300 selling 60 loaves of bread. What is the price elasticity of demand for Barb's bread? a) 0.266 b) 0.583 c) 0.6
- Steven has been your best friend since grade school. You have decided to quit your jobs and start up a bakery together since you both love bread. He insists he wants to start the business as a partnership. You want to persuade him to start up the business
- It takes Betty 4 hours to bake a cake and 2 hours to knit a sweater. What is her opportunity cost of 1 cake in terms of knitted sweaters?
- A bakery has fixed costs of $10 per day and variable costs of $1 per loaf. Its oven can handle up to 50 loaves a day, and it is impossible to obtain additional capacity. Sketch the bakery's average co
- Suppose the flour division at General Mills is deciding whether to risk a price war with Pillsbury by lowering its prices. If General Mills lets prices remain the same, then General Mills will earn $8 million in profits and Pillsbury will earn $7 million
- A farmer grows wheat and sells it to the miller for $1.25. The miller turns the wheat into flour and sells it to the baker for $2.00. The baker turns the flour into bread and sells it to consumers for $3.80. What is the value-added by the baker? a. $3.80
- Suppose the price of bagels in Allentown is currently $0.75 per bagel. There are 10 low-cost bakeries that can produce bagels, each of which has the supply function Qs = 200P - 100. There are 10 high-cost bakeries that can produce bagels, each of which ha
- You run a small pizza shop named Pizza Hat. Initially, you sold pizzas for $8, and every week you sold around 3000 pizzas. Each pizza costs you $3 to make. One day you decided to offer discounts to customers to see if you can boost sales significantly. So
- You are a produce grocer who sells two products: apples and bananas (you sell them in bushels, let's consider a bushel to be one unit of fruit). Each costs you $1 per bushel wholesale, which is your only cost. You can prevent resale among your customers,
- The cookie company in the mall hires only labor to produce cookies. The workers are paid $80 per day, and the cost of renting the space in the mall is $350 per day. 1) The daily fixed costs of production are: A. $80 B. $430 C. $350 D. $160 E. $0
- A farmer grows wheat, which she sells to a miller for $100. The miller turns the wheat into flour, which she sells to a baker for $150. the baker turns the wheat into bread, which she sells to consumers for $180. Consumers eat bread. a. Explain what is t
- It takes 4 hours for you to brew a gallon of cider and 2 hours to make a cake. Your sister Kelly takes 6 hours to brew a gallon of cider and 4 hours to make a cake. What is your opportunity cost of making a cake? What is Kelly's opportunity cost of making
- Suppose that the company Mama's Pies adds another store to sell its pastries. Supposed that it costs $400,000 to build the new store and assume that the new store will generate revenues of $450,000. W
- Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs. The bakery earns $800,000 in revenues and has $2 million in net worth. Based on this information, what is the economic profit for Donnie's Donuts?
- Cindy is a baker and runs a large cupcake shop. She has already hired 11 employees and is thinking of hiring a 12th. Cindy estimates that a 12th worker would cost her $100 per day in wages and benefit
- Jennifer takes 4 hours to make a loaf of bread and 2 hours to make a dozen cookies. Janet takes 6 hours to make a loaf of bread and 1.5 hours to make a dozen cookies. a. Who, if either, has an absolute advantage in baking bread? b. Who, if either, has a
- Taylor makes pecan pie using equipment that she rents for $15 and pecans and other ingredients that cost $3.27 a slice. She hires workers at $15 each and finds that they produce pie according to the f
- Evren wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K = l, r = 500). He must pay unio
- Danny is a 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $2.25 each, he sells 100 brownies. At a price of $1.75 each, he sells 300 brownies. If demand had the same elasticity for a price
- Production - Taylor makes pecan pie using equipment that she rents for $15 and pecans and other ingredients that cost $3.27 a slice. She hires workers at $15 each and finds that they produce pie accor
- Up to 500 customers a day line up to buy Avalon's breads, scones, muffins, and coffee. Staffing and management are worries. Avalon now employs 35 and plans to hire 15 more. Its payroll will climb by 3
- A food truck operator originally produced hamburgers and hotdogs. To serve the tastes of their various customers, the hot dog vendor decides to start producing turkey dogs and ham sandwiches as well. Since the new products were introduced, average costs r
- There is enough demand for cookies at Henion's that the owner thinks he might be able to justify installing another oven. Estimates of output for different numbers of workers with one oven and with tw
Explore our homework questions and answers library
Browse
by subject