Question

A bakery famous for its cupcakes opens its doors at 9 a.m. and allows each customer to purchase up to 2 cupcakes until the day's supply of cupcakes runs out. Customers begin lining up around 8 a.m. each day and the cupcakes usually run out around 9:30, leaving dozens of unserved customers disappointed. Which of the following statements about this market are true? Select all that apply.
1) The cupcakes are being sold below their equilibrium price.
2) The bakery is maximizing its short-run producer surplus.
3) The customers who receive cupcakes are the customers with the highest willingness to pay for cupcakes.
4) The bakery is not using price as the only means of allocating cupcakes to its customers.
5) Consumer surplus is being maximized.

Answer 1

Answer:

1) The cupcakes are being sold below their equilibrium price

3) The customers who receive cupcakes are the customers with the highest willingness to pay for cupcakes.

4) The bakery is not using price as the only means of allocating cupcakes to its customers.

.Explanation:

at equilibrium price, quantity demanded equals quantity supplied and there would be no excess demand as in the case of the bakery.

The customers who receive cupcakes are the customers with the highest willingness to pay for cupcakes because these consumers are willing to lineup for these cupcakes.

the bakery also allocates the cupcakes by time. the cupcakes are usually only available within a specific time