Consider the market for tacos sold by food trucks in Pittsburgh. Consider each taco truck to be an individual firm with the same cost function c(q) = F + q ₂ , where F represents fixed costs of equipping a food truck and q represents the number of tacos produced. In addition, there is a market demand of D(p) = 500 - 20p for tacos.

a. In the short run, determine the quantity each food truck would produce for any price in the market.

b. How does your answer to part (a) depend on F? Explain.

c. Suppose initially there are 10 food trucks in the market. Determine the short run market supply for any price.

d. Determine the short run equilibrium price and quantity in the market. How does the equilibrium depend on F?

Answer rating: 100% (QA)

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