Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 7

A bakery currently charges $1.50,the profit-maximizing price,for each gourmet cookie,and it sells 5,000 cookies per month. The bakery's rent and utility costs are a flat fee of $4,000 per month,and it has just signed a lease obligating it to make the payments for one year. To make each cookie costs $1 in labor and raw materials,regardless of how many cookies are made. The bakery has no costs other than those listed
a. What is the monthly economic profit earned by the bakery?
b. Over the short run (for the next few months),should the bakery keep operating or shut down? Why?
c. Assuming that the bakery's current "plant" is also its least-cost plant,should the bakery plan to exit or stay in business a year from now ?