3. Crusty's is a pizzeria with the following cost structure: its total fixed cost is $1200 perday, its total variable cost for producing a pizzas is, and its marginal cost is. Thedaily quantity demanded for Crusty's pizzas is Qp = 900-30P, where P is the price ofa Crusty's pizza. The market for pizza is monopolistically competitive.(a)'.Explain which features of the market for pizza lead to its being monopo-listically competitive.(b)What are the profit-maximising quantity of pizzas that Crusty's will pro-duce, the price it will charge, and its profits?Does Crusty's have market power? Explain how you know.Is the market for pizza in a long-run equilibrium? Explain why or why(c)(d)Anot.(e)Changes in the market for pizza cause the demand curve that Crusty'sis facing to change to QD=800-50P. What are the profit-maximising quantity ofpizzas that Crusty's will produce, the price it will charge, and its profits? Assumingthat all pizzerias have the same costs and face identical demand, is the market forpizza in a long-run equilibrium? Explain why or why not.

Monopolistic Competition: The monopolistic competition exists when in the market there are many…

Answered: 3. Crusty's is a pizzeria with the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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