The daily demand for pizzas is Qd = 750 - 25P, where P is the price of
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The daily demand for pizzas is Qd = 750 - 25P, where P is the price of a pizza. The daily costs for a pizza company initially include $50 in fixed costs (which are avoidable in the long run but sunk in the short run), and variable costs equal to VC = Q2/2, where Q is the number of pizzas produced in a day. Suppose that in the long run there is free entry into the market. Assume costs rise by $6 per pizza, what is the new short-run market equilibrium. What is the new market equilibrium in the long run?
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a The new shortrun market equilibrium is Q 400 pizzas P 14 b The ...View the full answer
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