Suppose Dan's cost of making pizzas is C(Q)=4Q+(Q2/40), and his marginal cost is MC=4+(Q/20). Dan is...

Suppose Dan's cost of making pizzas is

C(Q)=4Q+(Q2/40),

and his marginal cost is

MC=4+(Q/20).

Dan is a price taker.

a. What is Dan's supply function?

	Q = 20P - 20 if P ≥ 4.5.
	Q = 20P - 80 if P ≥ 4.
	Q = 40P + 80 if P ≥ 4.
	Q = 20P + 80 if P ≥ 4.
	Q = 20P - 40 if P ≥ 4.5.

b. What if Dan has an avoidable fixed cost of $2.5? What is Dan's supply function?

	Q = 40P + 20 if P ≥ 4.
	Q = 20P - 80 if P ≥ 4.5.
	Q = 20P + 80 if P ≥ 4.5.
	Q = 20P - 40 if P ≥ 4.
	Q = 40P - 80 if P ≥ 4.5.

Expert Solution

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Rahul Sunny answered 1 year ago

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