Question
Pat's Pizza Kitchen is a price taker, and the table displays its total costs: Output (pizzas per day)Total cost 00 121 230 341 454 569
Pat's Pizza Kitchenis a price taker, and the table displays its total costs:
Output (pizzas per day)Total cost
00
121
230
341
454
569
690
(i)What is Pat's shut-down point? I mean a price below which Pat will not be operating.
(ii) Calculate/identify Pat's supply curve.
(ii) Calculatethe profit maximizing quantity and economic profit if the price is $14 a pizza.
(iii) Assume that now, there is an increase in fixed costs =20, whereas TVC stays the same.Assume thatthere are many homogeneousfirmsallowed to enter/exit. Can you compute the (long-run) equilibrium price?
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