Question 2 - Pizza Di Napoli (20 Points)

You own one of the many pizza joints in Naples, Florida which you named Mia Pizzeria Di Napoli. You produce a classic Napoli-style pizza based on a recipe that your great-great-grandmother invented back in the "home country" (Italy, in case you weren't sure where Naples is - ironic that you ended up living in a city of the same name). You only sell this one style of pizza and you only sell a combo meal that consists of an Extra Large pizza and a bottle of Chianti. New pizza joints are popping up all the time due to the attractive nature of doing business in Florida, unlimited amount of land for expansion, and the increasing number of tourists.

Your resident economist (who is also the sommelier), estimated your current residual demand curve, total costs, variable costs, and marginal costs as follows:

Q = 50 - P TC = 500 + 10Q VC = 10Q MC = 10

Comment on the current and short- and long-run prospects of your pizza joint. Your explanation must include a graph.