Long-run equilibrium of competitive market Q.5 Assume that the market for pizza in Melbourne is competitive, with 100 pizza restaurants. a) Illustrate and explain the long run equilibrium on the market, using graphs for the entire market and for an individual restaurant. Firm Industry Price/ Price/ Cost Cost Quantity Quantity b) The supply curve intersects the demand curve at price _. Each restaurant bakes quantity pizzas, so the total quantity of pizzas produced is Pizza restaurants earn _profit, since equals c) Now assume that the council passed a law which limits the number of restaurants serving pizza to 80. Show the effect of this law on graphs in part (a) and finish the paragraph. If the city council restricts the number of restaurants to 80, the market supply curve shifts to_ _. The market price rises to_, and individual restaurants produce output Market output is now and the price average total cost, so each firm is making a positive/zeroegative profit. Without restrictions on the market, this would induce other restaurants to the market, but they can't, since