In NYC, the market for Vietnamese food is perfectly competitive. There are 200 restaurants selling Vietnamese food, each

restaurant has a weekly total cost equal to SRTCi = qi^(2)/200 + 4qi + 400 where qi is the number of meals served in a week at

the typical restaurant i.

a) In this industry, what is the short run shut-down price?

b) What is the short run supply function at the typical Vietnamese restaurant?

c) Sum across restaurants and find the short-run market supply of Vietnamese meals in NYC.

Now shift your attention to modeling the demand aside.

In the city, 120,000 potential consumers are interested in Vietnamese food. Each consumer has preferences for Vietnamese

meals (V) and money spent on other items (m) summarized in the utility function Uj(Vj,mj) = 20Vjj - 5Vj^(2) + ej. where Vj is the

weekly number of Vietnamese meals a consumer buys and mj is consumer j's expenditure on all other products (keep in mind

that Pm = $1)

d) Assume that the typical consumer always spends a small share of her overall budget on Thai meals and use the utility

maximization conditions to find the demand for Thai food of the typical consumer (keep in mind that since utility is

quasi-linear, you can find demand without information about the consumer's weekly budget).

e) Sum across consumers to find the weekly market demand for Thai meals in NYC.

f) Now use the demand and supply function that you obtained in part e) and in part c) to find the equilibrium quantity

and the equilibrium price in the NYC market for Thai meals.

g) How many meals does the typical Thai restaurant serve each week?

h) Are Thai restaurants earning a profit, breaking even, or incurring a loss?