Cake shops use flour to produce cakes. How do cake shops respond to a rise in the price of flour, other things remaining the same? Cake shops _____. A. Increase the supply of cakes to balance out the higher cost of producing a cake. B. Decrease the quantity supplied of cakes because now it is less profitable to produce cakes. C. Decrease the supply of cakes because the cost of producing a cake has risen.
Cake shops use flour to produce cakes. How do cake shops respond to a rise in the price of flour, other things remaining the same? Cake shops _____. A. Increase the supply of cakes to balance out the higher cost of producing a cake. B. Decrease the quantity supplied of cakes because now it is less profitable to produce cakes. C. Decrease the supply of cakes because the cost of producing a cake has risen.
Chapter6: Elasticities
Section: Chapter Questions
Problem 12P
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Cake shops use flour to produce cakes. How do cake shops respond to a rise in the price of flour, other things remaining the same? Cake shops _____. A. Increase the supply of cakes to balance out the higher cost of producing a cake. B. Decrease the quantity supplied of cakes because now it is less profitable to produce cakes. C. Decrease the supply of cakes because the cost of producing a cake has risen.
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