Question #2 Setup:

2. Pizza Profits. You own a property on Main Street on which a small, vacant take-out pizza stand sits.

There are other vacant take-out pizza stands in the same locale (i.e. Main Street) as well as on the less busy Side Street locale. From your market analysis, you are confident that the sites will attract the following number of pizza sales each month (based on their locale):

Main Street: 400

Side Street: 250

The market price for pizzas in the city is $5.00. You know the cost of running and maintaining a pizza stand (paid by the operator of the business of course) is fixed at $600 per month.

Jobs in another industry which pay $150.00 per month are plentiful in the city and therefore $150.00 is the minimum profit after rent operators must achieve in order for them to run a pizza stand.

Note: If any new assumptions are made, they will continue to be in effect for subsequent questions.

A: Assume interest starts picking up in the pizza stand business.

You receive multiple calls inquiring about renting your property and you also find out the Side Street properties are renting for $375.00 per month on a month-to-month basis. How much rent are you able to collect for your Main Street property? Why? Show your work with the help of a table.

B. Seeing how much profit there is to be made in the pizza business (compared to the alternative industry which, as a reminder, pays just $150 per month), would-be pizza stand operators rush to open up new businesses.

With far more be operators in the market than properties available for them, what will the rent for each properties in each of the locales (Main Street and Side Street) eventually stabilize at? Why? Show your work with the help of a table.

C. The evening news reports that demand for pizza is surging in your market. Experts predict that the number of pizzas a Main Street location can sell will increase to 500 per month and prices will increase to $7.00 per pizza.

With monthly profits expected to increase by $2,100 per month, this is a GREAT time to be in the pizza business! the reporter concludes.

Will the pizza operators at Main Street locations really keep that profit? Explain why or why not. What business is it really a GREAT time to be in? :)

I only need help with part b and partc. Idid part a myself.