A local pizza shop has hired you as a consultant to help it compete with national chains in the area. Because most business is handled by these national chains, the local shop operates as a price taker. Using historical data on costs, you find that short-run total costs each day are given by STC = 10 + q + 0.1q^2, where q is daily pizza production. a. What is this pizza shop’s short-run supply curve? b. If the market price is $5.00, what is the pizza shop’s daily production quantity and profits? c. Suppose the pizza shop wants to know the lowest price such that it can break even (i.e., maintaining a net profit of zero). Please help the firm find this price

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition
Section: Chapter Questions
Problem 6E
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A local pizza shop has hired you as a consultant to help it compete with national chains in
the area. Because most business is handled by these national chains, the local shop operates as
a price taker. Using historical data on costs, you find that short-run total costs each day are
given by
STC = 10 + q + 0.1q^2,
where q is daily pizza production.
a. What is this pizza shop’s short-run supply curve?
b. If the market price is $5.00, what is the pizza shop’s daily production quantity and
profits?
c. Suppose the pizza shop wants to know the lowest price such that it can break
even (i.e., maintaining a net profit of zero). Please help the firm find this price

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