PLEASE DO PARTS E-I Consider the local market for burritos (denoted by q) sold by food...

PLEASE DO PARTS E-I

Consider the local market for burritos (denoted by q) sold by food trucks in Pittsburgh. There is a market demand of D(p)=1000-15p for burritos. Each food truck can be thought of as an individual firm, all with the same cost function C(q)=F+2q 2 , where F represents fixed costs of equipping a food truck. a. In the short run determine the quantity each burrito truck would produce for any price in the market. b. Does your answer to part (a) depend on F? Explain. c. Suppose initially there are 40 food trucks in the market. Determine the short run market supply for any price. d. Determine the short run equilibrium price and quantity in the market. Does this depend on F? Explain. e. Give an expression for the firm’s profits in the short run. Does each food truck earn positive, negative, or 0 profits. How do the firm’s profits depend on F? Explain. f. Now consider the long run with free entry and exit. Determine the output of each food truck and the price in the market for which no firm will have an incentive to enter or exit. g. Determine the total quantity produced in the long run. How do these depend on F? Explain. h. How many food trucks will be in this market in the long run? How does this depend on F? [For simplicity assume the formula for number of firms produces an integer so you don’t have to worry about rounding.] i. In the long run does each firm earn positive, negative, or 0 profits. How does this depend on F? Explain.

Expert Solution

Rahul Sunny answered 2 years ago

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