# 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
. 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?

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?