A pie shop in a monopolistically competitive market has a demand curve for their pies given...

A pie shop in a monopolistically competitive market has a demand curve for their pies given by P = 35 - Q. The variable costs of producing a pie are given by the equation VC = 5Q and so the marginal costs are constant at MC = $5. If the pie restaurant is in a long-run equilibrium, what must its fixed costs be? (Write answer without the dollar sign.)

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Reason: In the long run, there are no fixed costs. All the factors of productions are variable in this long run and they reach the no profit situation. In the long run, even the costs are variable and thus fixed costs are just the sunk costs that are expended by the firm in the market in the short run.

Rahul Sunny answered 2 years ago

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