Final answer:
Celia's Frappy Frozen Yogurt seems to operate in a perfectly competitive market because it has fixed and variable costs typical for such a market and the workers' pay suggests homogeneity of labor, a condition of perfect competition.
Step-by-step explanation:
Based on the information provided, Celia's Frappy Frozen Yogurt shop likely operates in a perfectly competitive market. In a perfectly competitive market, there are many buyers and sellers, none of whom have the market power to influence prices. Celia's costs are consistent with a competitive firm: she has fixed costs ($100 per day for space, equipment, etc.), and variable costs that depend on the quantity of output (such as $80 per worker and $0.50 per cup). The fact that Celia pays each worker the same wage could imply that workers are equally skilled and interchangeable, which is characteristic of perfect competition where the input, labor in this case, is homogeneous.
The decision for Celia to continue operating despite potential losses mimics the example given for the raspberry farm. When the price covers the average variable cost, the firm can pay its variable costs and some fixed costs, minimizing losses. However, if the price falls below average variable costs, continuing operation leads to greater losses than simply shutting down and bearing the fixed costs alone.
Therefore, the approach and dynamics of decision-making in Celia's shop suggest it operates under perfect competition, where firms are 'price takers' and must accept the market price determined by the supply and demand.