A compony has variable costs of $8.00 per unit and a fixed cost of $1,750,000. The product they sell has a selling price of $11.00 each. Last year they sold 1,000,000 items . What was their profit

The statements about the market that are true are:

1) The cupcakes are being sold below their equilibrium price. This is true because we can see there exists excess demand which won't exist at the equilibrium price.

3) The customers who receive cupcakes are the customers with the highest willingness to pay for cupcakes. This is why they are standing in the queue even before the bakery opens.

4) The bakery is not using price as the only means if allocating cupcakes to its customers. It is also using time as a factor as only those receive cupcakes who come early.

(2) and (4) are false because they are maximized only at the equilibrium level.