Consider again Worked-Out Problem 14.2. The daily demand for
pizza is
Qd=32,900−600P,Qd=32,900−600P,where P is the price of a pizza. The daily costs for a
pizza company include $845 in avoidable fixed costs and variable
costs equal to
VC=5Q+Q2/80,VC=5Q+Q2/80,where Q is the number of pizzas produced each day.
Marginal cost when producing Q pizzas is
MC=5+Q/40.MC=5+Q/40.Recall that the price is $11.50, and the total quantity demanded is
26,000 pizzas per day. In a long-run equilibrium, each active firm
produces 260 pizzas...