Need complete answers to A-J The total cost function of ACME pizza is given by T

Question

Need complete answers to A-J

The total cost function of ACME pizza is given by TC = 5 + q + 0.5 q^2. What is the fixed cost? What is the variable cost functoin? What is the average cost function? What is the margnial cost function? Draw graph for the above cost function. When does the pizza place have increasing returns to scale, or decreasing return to scale? Justify your answer. Determine the short run supply function of the pizza place assuming that it is in perfectly competitive market. If there are 1,000 pizza places just like ACME in terms of cost structure, what would be the short run market supply function? If the market demand function is P = 7 -Q / 1000 (Q is the quantity demanded in for the whole market), what is the equilibrium prices and the equilibrium quantity in the market? How much pizza ACME will produce in the short run equilibrium? What is the short run profit for ACME? Will the number of pizza store increase or decrease in the long run? Justify your answer.

Explanation / Answer

a) TC = 5+q+0.5q^2 Now if q=0 then cost is 5 which is the fixed cost. Variable cost = TC-FC = q+0.5q^2

b) AC = TC/q = 5/q+1+0.5q; MC = dTC/dq = 1+q

c)

d) When increase in output is more than increase in input then pizza place will have increasing return to scale. When increase in output is less than increase in input then pizza place will have decreasing return to scale. When increase in output is equal to increase in input then pizza place will have constant return to scale.

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.