Business and economics

Directions for this passage: Numbered portions are marked [n]…[/n] (underlined on paper, highlighted online). Each numbered portion matches the question with the same number. Paragraphs are numbered for reference.

Seventy-Five Cents, Explained

Paragraph 1 Every morning at five o’clock, Marisol Ferreira unlocks the back door of Crescent Street Bakery and turns on the ovens. For three years, her sourdough loaf cost $6.00, and her regular customers could count out the money before they reached the counter. Then, over four months last spring, the price of [1]flour, which the bakery buys in fifty-pound sacks rose[/1] by nearly a third. The costs of butter and electricity climbed as well.

Paragraph 2 Marisol faced a decision that many small business owners confront when their costs go up. She could keep her prices the same and accept smaller profits, raise her prices, or quietly bake smaller loaves and charge the same amount. Holding prices steady was not realistic for long; the regional mill that supplies her flour had already raised [2]their[/2] prices twice. Still, Marisol was reluctant [3]of raising[/3] the price of a loaf that so many people bought every week.

Paragraph 3 Shrinking the loaves was tempting. Customers would be less likely to notice an ounce or two missing than a higher number on the sign. But Marisol worried that her regulars, many of whom had bought the same loaf for years, would eventually feel tricked. She chose instead to raise the price by a [4]modest[/4] amount, from $6.00 to $6.75.

Paragraph 4 She also decided to explain the change rather than simply post a new price. Next to the register, she hung a chalkboard with the heading “Where Your $6.75 Goes.” [5]She had bought the chalkboard at a secondhand furniture store the week before.[/5] At the bottom, she added a line in smaller letters: “The recipe hasn’t changed. Neither has the size of the loaf.”

Paragraph 5 For about two weeks, sourdough sales dipped slightly. Then they returned to their usual level. Several regulars told Marisol that they appreciated knowing the reason for the increase. One retired schoolteacher put it simply: she would rather pay seventy-five cents more for a loaf she recognized than the same price for one that had mysteriously shrunk.