The daily costs for a pizza company

Reference no: EM13914288

The daily demand for pizzas is Qd = 750 − 25P , where P is the price of a pizza. The daily costs for a pizza company include $50 in fixed costs, and variable costs equal to V C(Q) = Q2/2, where Q is the number of pizzas produced in a day. Marginal cost is MC(Q) = Q. Suppose that in the long run there is free entry into the market and the fixed cost is avoidable.

(a) What are the long-run competitive equilibrium price and quantity?

(b) How many firms are active, and how much does each produce?

(c) If demand doubles to Qd = 1500 − 50P and, in the short run, fixed costs are sunk, what is the new short-run competitive equilibrium?

(d) What is the new competitive equilibrium in the long run?

Reference no: EM13914288

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