1. Pizza Hut estimates that on the average a store has fixed costs of $100 per day. The fixed costs include interest payments on borrowed funds used to fund construction of the store and rental payments for their land. Pizza Hut also estimates that the marginal cost of a pizza is $8. Suppose Pizza Hut is a monopoly. (Later you will see that Pizza Hut is probably better thought of as a monopolistic competitive firm. But you will also see that the answers to the questions you next see are the same [at least in short run] regardless of whether Pizza Hut is a monopoly or a monopolistic competitive firm.) Your manager wants to know what are the profitmaximizing price for a pizza and the profit-maximizing quantity. Your manager also wants to know what will be the profit at this price and quantity. To make your analysis easier, your manager will allow you to round your estimated demand curve coefficients to the nearest integer value

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To address the first part of your question lets assume that Exhibit 2 in Chapter 7 provides the production function for a firm where the output Q is a ... View the full answer