The following table shows part of the cost record of a bakery that makes specialty cakes....

 

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The following table shows part of the cost record of a bakery that makes specialty cakes. Suppose the manager accidently dripped cooking grease on it making most of the table illegible. i. Reconstruct the table using remaining legible entries. [6] (Note: Show all working) ii. Q 1 iv. 2 3 4 5 6 TC 20 144 TVC 72 TFC AC 18 MC 10 30 AVC 15 One of the workers at the bakery, while discussing the general cost trends, claims that it is possible for marginal cost to fall while average cost rises. Is his claim correct. Why or why not? [3] Suppose the manager's statistician friend estimates the elasticity of demand for their croissant to be -2. If the bakery's marginal cost of producing croissants is $1, what price should they charge to maximize profit? [3] The bakery has a monopoly on the sale of its Fresh Fig tart. Suppose the same friend of the manager estimates the elasticity of demand for their Fig tart to be -0.5. How can you say that the bakery cannot be maximizing profits. [2] The following table shows part of the cost record of a bakery that makes specialty cakes. Suppose the manager accidently dripped cooking grease on it making most of the table illegible. i. Reconstruct the table using remaining legible entries. [6] (Note: Show all working) ii. Q 1 iv. 2 3 4 5 6 TC 20 144 TVC 72 TFC AC 18 MC 10 30 AVC 15 One of the workers at the bakery, while discussing the general cost trends, claims that it is possible for marginal cost to fall while average cost rises. Is his claim correct. Why or why not? [3] Suppose the manager's statistician friend estimates the elasticity of demand for their croissant to be -2. If the bakery's marginal cost of producing croissants is $1, what price should they charge to maximize profit? [3] The bakery has a monopoly on the sale of its Fresh Fig tart. Suppose the same friend of the manager estimates the elasticity of demand for their Fig tart to be -0.5. How can you say that the bakery cannot be maximizing profits. [2]

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SOLUTION NB Thus these cost structures help to know the output level ... View the full answer