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. Marginal cost is MC = Q. Suppose that in the long run there is free entry into the market. Suppose marginal 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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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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