The daily demand for pizzas is where P is the price of a pizza. The daily costs for a pizza company initially include $50.00 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. Assume fixed costs fall to $18 and, in the short run, the number of firms is fixed (so that neither entry nor exit is possible) and fixed costs are sunk. Instructions: Round your answers to the nearest whole number. a. What is the new market equilibrium in the short run? Q" = P = $ There are P" = Qd = 780-25P pizzas. There are b. What is the new market equilibrium in the long run? firms in the short run. pizzas. firms in the long run.

The daily demand for pizzas is where P is the price of a pizza. The daily costs for a pizza company initially include $50.00 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. Assume fixed costs fall to $18 and, in the short run, the number of firms is fixed (so that neither entry nor exit is possible) and fixed costs are sunk. Instructions: Round your answers to the nearest whole number. a. What is the new market equilibrium in the short run? Q" = P = $ There are P" = Qd = 780-25P pizzas. There are b. What is the new market equilibrium in the long run? firms in the short run. pizzas. firms in the long run.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

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