Suppose that the market for pizzas in your town is perfectly (or purely) competitive, with a market price of $14 per pizza in longrun equilibrium. A local pizza restaurant, Pizzazzy, signs a one-year lease in a new building in town and continues selling pizzasat this price. People in your town view Pizzazzy pizzas as the same as other pizzas.Suppose that a couple of months after the new pizza restaurant opens, the local government institutes a $8 per pizza priceceiling. If you buy a $8 pizza from Pizzazzy a week later (and assuming Pizzazzy is behaving rationally), what do you knowabout the marginal cost, average total cost, and average variable cost at the profit maximizing point of production after the priceceiling is imposed?Answer Bankmarginal costno higher than $8no higher than $14 butdefinitely higher than $8average total costhigher than $14no higher than $14 butaverage variable costmaybe higher than $8

Given: The market price of pizza=$14 Price ceiling=$8 To find: Marginal cost, Average total cost,…

Suppose that the market for pizzas in your town is perfectly (or purely) competitive, with a market price of $14 per pizza in long run equilibrium, A local pizza restaurant, Pizzazzy, signs a one-year lease in a new building in town and continues selling pizzas at this price. People in your town view Pizzazzy pizzas as the same as other pizzas. Suppose that a couple of months after the new pizza restaurant opens, the local government institutes a $8 per pizza price ceiling. If you buy a S8 pizza from Pizzazzy a week later (and assuming Pizzazzy is behaving rationally), what do you know about the marginal cost, average total cost, and average variable cost at the profit maximizing point of production after the price ceiling is imposed? Answer Bank marginal cost no higher than $8 no higher than $14 but definitely higher than $8 average total cost higher than $14 no higher than $14 but maybe higher than S8 average variable cost

Suppose that the market for pizzas in your town is perfectly (or purely) competitive, with a market price of $14 per pizza in long run equilibrium, A local pizza restaurant, Pizzazzy, signs a one-year lease in a new building in town and continues selling pizzas at this price. People in your town view Pizzazzy pizzas as the same as other pizzas. Suppose that a couple of months after the new pizza restaurant opens, the local government institutes a $8 per pizza price ceiling. If you buy a S8 pizza from Pizzazzy a week later (and assuming Pizzazzy is behaving rationally), what do you know about the marginal cost, average total cost, and average variable cost at the profit maximizing point of production after the price ceiling is imposed? Answer Bank marginal cost no higher than $8 no higher than $14 but definitely higher than $8 average total cost higher than $14 no higher than $14 but maybe higher than S8 average variable cost

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Homework Demand equation of a firm is q = V75 – pp and supply equation of this firm is q = p/2 – 20 , determine consumers' surplus and producers' surplus under the market equilibrium. Sketch the graph.
A firm produces a good at a marginal cost of $20 per unit and sells it for $40 per unit. It currently has an inventory of 500 units, and P = 30 - .05Q describes its current demand curve. In these circumstances, what is the firm’s optimal price?
Why does a degree in price dispersion suggest that we do not have a perfect market?
Which of the following companies are most likely to face a nearly horizontal demand curve? Group of answer choices Companies (like Netflix) offering programs on television or computers Companies offering search engines on the Internet clothing retail stores offering their goods on the Internet The wholesale oil industry.
You decide to create a burger restaurant named BurgerDeals to help pay for college fees. The table below contains total pricing information for your single product, large extra-cheese burger. Your town's burger market is fiercely competitive, with big extra-cheese burger selling for $7 on average. Fill in the blanks in the table and answer the following question. What is AVC if you produce 6 burgers?
Is a firm that satisfies the immediate needs and wants of target markets always doing what’s best for its consumers in the long run?
Pete sells two different soups (chicken soup and beef soup) in two competitive markets. Suppose the firm's cost function is given by C = ½ q1^2 + ¼ q2^2 - 1/6 (q1)(q2) where q1 is the output of chicken soup and q2 is the output of beef soup. The price of beef soup is $3. a. Find the firm's supply curve for chicken soup. b. Find how the firm's supply of beef soup varies with the price of chicken soup Show work and explain
Suppose the market referred to in the previous problem is suddenly hit by a decrease in tastes and preferences. What will happen to Q in this market in the long run (relative to the initial equilibrium)? a) It will decrease b) It will not only decrease but fall to zero c)It will be unchanged d) It will increase e) It will be affected by what is known as the “Kazarosyan Effect”
Q2. In Pakistan, there are several farmers in various situations, selling identical products to the market, and many buyers. At the market, it is easy to compare prices. Therefore, agricultural markets often get close to Perfect Competition Market; explain it numerically as well as graphically.
After serving as President of the United States for eight years, Dena has retired from politics and has decided to become a wheat farmer. The market for wheat is perfectly competitive and the current market price for wheat is $10 per bushel. Dena is currently producing 8 bushels (Dena can only produce this good in whole units). Her total cost at 8 units of output is $88 and her variable cost at 8 units of output is $64. Dena knows that if she produces a 9th unit her total cost will become $97, and if she produces a 10th unit her total cost will become $110. Dena’s goal is to maximize her profits. Based on this information, identify whether each of the following would be true or false and briefly explain your reasoning. Dena is currently losing money in the short-run and she would be better off if she shutdown and produced zero. Dena is not currently profit maximizing at 8 units of output and she could increase her profits if she expanded output by one unit. Dena would increase her…
In a perfectly competitive market: the market price is 28 Marginal cost (MC) = 2(Q) + 8 average total cost at equilibrium is 28, and average variable cost at equilibrium is 7 The profit maximizing price is Number The profit maximizing quantity is Number :Total revenue is Number Total cost is Number Average fixed cost is Number Total fixed cost is Number Total profit/loss is Number Marginal ravenue is Number At this market price,over time, firms would: 1. Enter the industry 2. leave the industry 3. There is no incentive to enter or leave the industry. Number (assume all firms have the same cost structure) :At the market price, could this be a long run equilibrium price? (if yes=1, no=D2) (assume all firms have the same cost structure) Number
We assume perfect competition on the market for Mobil phones. The demand and supply curve is given as follows: PAS (x) = -5000 +100x P^d (x) = 7000 - 50x Calculate the equilibrium price and equilibrium quantity. Chose an answer. а. X-D70, р33000 5. X=3000, p=80 c. X =40, p=2500 d. X-80, р33000