Question: Suppose the daily demand function for pizza in Berkeley is Qd = 1,525 - 5P. The variable cost of making Q pizzas per day is

Suppose the daily demand function for pizza in Berkeley is Qd = 1,525 - 5P. The variable cost of making Q pizzas per day is C(Q) = 3Q + 0.01Q2. There is a $100 fixed cost (which is avoidable in the long run), and the marginal cost is MC= 3 + 0.02Q.
There is a free entry in the long run. What is the long-run market equilibrium in this market? Suppose that demand increases to Qd = 2,125 - 5P. If in the short run, fixed costs are sunk, what is the new short-run market equilibrium? What is the new long-run market equilibrium if there is free entry in the long run? What if, instead, demand decreases to Qd = 925 - 5P.

Step by Step Solution

★★★★★

3.44 Rating (157 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

If there is free entry in the long run the longrun market equilibrium in this market is P 5 and Q 15... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

847-B-E-D-S (2896).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

The daily demand function for the AutoBright car washing service has been estimated to be Q = 75 2P, where Q is the quantity of cars and P is the price. Determine what price would maximize total...

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...

Suppose the daily demand for coffee in Seattle is Qd= 100,000 (3 - P)2. What is the elasticity of demand at a price of $2? At what price would the total expenditure on coffee be largest?

Suppose the daily demand function for pizza in Berkeley is Qd = 3,500 - 100P. The variable cost of making Q pizzas per day is VC (Q) = 3Q + 0.01Q2 and there is a $100 fixed cost (which is avoidable...

Problem set 1 Jennifer's demand function for ice cream cones is qd Jenn = 10-2.5P at prices below $4 and zero at prices above $4. Amy's demand function is qd Amy = 9-1.5P at prices below $6 and zero...

Suppose the daily demand function for pizza in St. Catharines is Qd = 1525 5P. For one pizza store, the variable cost of making q pizzas per day is C (q) = 3q+0.01q2, there is a $100 xed cost, and...

Suppose the daily demand function for pizza in St. Catharines is Qd = 1525 5P. For one pizza store, the variable cost of making q pizzas per day is C(q) = 3q+0.01q^2 , there is a $100 fixed cost, and...

2. Suppose there are 20 lowcost bakeries that can produce bagels in St. Catharines, each of which has the supply function qfow_cost = 20F 10 at prices no less than $0.5 and zero at prices below $0.5....

Suppose the daily demand function for pizza in St. Catharines is Qd = 1525 5P . For one pizza store, the variable cost of making q pizzas per day is C(q) = 3q+0.01q^2, there is a $100 fixed cost, and...

MARKET EQUILIBRIUM. to not (a) Jennifer's demand function for ice cream cones is Qu Jenn =10-4P at prices below $2.5 and zero at prices above $2.5. Amy's demand function is Q% # 6 -2P at prices below...

Sales cutoff tests are performed to determine that sales are recorded in the correct time period according to the revenue recognition rules of the applicable financial reporting framework. a. What is...

Find the equation of the tangent line to the parabola y2 = -18x that is parallel to the line 3x - 2y + 4 = 0.

Find the product and write the result in standard form. - 9 i ( 9 i - 7 )

How can project managers ensure effective integration of project components? a) By delegating all tasks to team members b) By using project management software c) By continuously coordinating and...

A firm producing hockey sticks has a production function given by q = 2 K L In the short run, the firms amount of capital equipment is fixed at K = 100. The rental rate for K is v = $1, and the wage...

Returning to the gumball producer in Problem, let us look at the possibility that producing these delectable treats does not necessarily experience constant returns to scale. a. In Problem, we showed...

Venture capitalist Sarah purchases two firms to produce widgets. Each firm produces identical products and each has a production function given by qi = Ki Li Where i = 1, 2 The firms differ,...

8.33 points Consider the following information: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock A Stock B Recession .15 .06 ?.20 Normal .65 .07 .13 Boom .20 .11...

Your investment portfolio consists of $15,000 invested in only one stocklong dashMicrosoft. Suppose the risk-free rate is 4%, Microsoft stock has an expected return of 14% and a volatility of 37%,...

In a perfect market, what kind of response would you expect when your company announces that it has struck gold and plans to pay a special dividend next month? What reaction do you expect over this...