a) In this industry, what is the short run shut-down price? b) What is the short run supply function at the typical Vietnamese restaurant? c) Sum across restaurants and find the short-run market supply of Vietnamese meals in NYC
a) In this industry, what is the short run shut-down price? b) What is the short run supply function at the typical Vietnamese restaurant? c) Sum across restaurants and find the short-run market supply of Vietnamese meals in NYC
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
a) In this industry, what is the short run shut-down
b) What is the short run supply function at the typical Vietnamese restaurant?
c) Sum across restaurants and find the short-run market supply of Vietnamese meals in NYC
Transcribed Image Text:In NYC, the market for Vietnamese food is perfectly competitive. There are 200 restaurants selling Vietnamese food, each
restaurant has a weekly total cost equal to SRTCI = q?/200 + 4q + 400 where q, is the number of meals served in a week at
the typical restaurant i.
1%3=
Expert Solution
Introduction
When price is less than average variable cost, it is better for the firm to shut down as per the shut down rule.
Short run supply function can be found out by equating marginal cost with price. As for firms in perfect competition Price equals marginal cost.
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