how many active doughnut firms are there in Crullaire?

In the city of Crullaire, the demand curve for doughnuts

In the city of Crullaire, the demand curve for doughnuts

Question
Just looking for explanations; already have the answers
. If you can do step by step that’d be great since I’m not the best at math
.

In the city of Crullaire, the demand curve for doughnuts is given by the equation P=39-Q/20, where Q is the number of doughnuts per day and P is the price of a doughnut
. Each doughnut shop that is open has a fixed cost of $200 per day which must be paid so long as the shop is in business and regardless of the number of doughnuts it sells
. There is also a variable cost of $4 for each doughnut sold
. Each doughnut shop has a capacity of 40 doughnuts per day
. Initially, 12 doughnut shops are open in Crullaire
. A doughnut shop that is open cannot escape its fixed costs immediately; instead, the doughnut shop must give 6 months advance notice to its landlord that it will close
. It also takes about 6 months to organize and open a new doughnut shop
.

What are the short-run competitive equilibrium price P* and quantity Q* of doughnuts in Crullaire?

ANSWER IS P=15, Q=480

In the city of Crullaire, the demand curve for doughnuts is given by the equation P=39-Q/20, where Q is the number of doughnuts per day and P is the price of a doughnut
. Each doughnut shop that is open has a fixed cost of $200 per day which must be paid so long as the shop is in business and regardless of the number of doughnuts it sells
. There is also a variable cost of $4 for each doughnut sold
. Each doughnut shop has a capacity of 40 doughnuts per day
.

In the long run, the doughnut market in Crullaire is characterized by free entry and exit of doughnut shops
. In long-run competitive equilibrium, how many active doughnut firms are there in Crullaire?

ANSWER IS 2

In the city of Crullaire, the demand curve for doughnuts

Place New Order
It's Free, Fast & Safe

"Looking for a Similar Assignment? Order now and Get a Discount!

Feeling Lucky?

Enter your email address to spin the wheel for a chance to win exciting offers.