Question: The market demand and supply function for Pizza in New Town were: Qd = 10,000 100P Qs = - 2,000 + 100P a. Determine

The market demand and supply function for Pizza in New Town were: Qd = 10,000 – 100P Qs = - 2,000 + 100P

a. Determine the equilibrium price and quantity of the Pizza.

b. Plot the market and demand curves, label the equilibrium point E, and draw the demand curve faced by a single Pizza shop in this market on the assumption that the market is perfectly competitive. Show also the marginal revenue of the firm on the figure.

c. If the total cost function of the firm is TC = 500 + 2Q + Q2, determine the price-quantity combination that will maximize the firm’s profit.

d. Determine the profit. What adjustments should be anticipated in the long run?

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