Two friends have an idea for a new food truck called Funk Seoul Brother, that sells Korean street food and sushi burritos. It would be the only supplier of this food in Portland. Market research suggests that the demand curve for the food will be P=40- (Q/80). It will cost $2000 to set up the food truck, which is necessary before any food can be made. In addition to the setup cost, there is a marginal cost of $6 per entrée for every entrée made. a. What is the profit-maximizing price and quantity? What profit will this food truck generate? b. Ifthis market were instead perfectly competitive, what would be the equilibrium price and quantity? c. How much deadweight loss occurs under the monopolist?
Two friends have an idea for a new food truck called Funk Seoul Brother, that sells Korean street food and sushi burritos. It would be the only supplier of this food in Portland. Market research suggests that the demand curve for the food will be P=40- (Q/80). It will cost $2000 to set up the food truck, which is necessary before any food can be made. In addition to the setup cost, there is a marginal cost of $6 per entrée for every entrée made. a. What is the profit-maximizing price and quantity? What profit will this food truck generate? b. Ifthis market were instead perfectly competitive, what would be the equilibrium price and quantity? c. How much deadweight loss occurs under the monopolist?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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