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# handout-5 - would Luigi offer for sale Explain thoroughly...

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Handout 5: Pure Competition Luigi's Pizza Kitchen is a price taker. It has the following hourly costs: Output Total Cost (pizzas per hour) (dollars per hour) 0 \$10 1 21 2 30 3 41 4 54 5 69 6 86 a) If pizzas sell for \$15, what is Luigi's profit- maximizing output per hour? What is his profit? Your answer must include graphical as well as numerical solutions. You must show the total and marginal graphical solutions. b) If pizzas sold for \$11 instead of \$15, how many pizzas
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Unformatted text preview: would Luigi offer for sale? Explain thoroughly with graphical as well as numerical solutions. c) What is Luigi's supply curve? Explain and show this graphically. d) What price will cause Luigi to leave the pizza industry? What price will cause other firms with costs identical to Luigi's to enter the industry? e) What is the long-run equilibrium price of pizza? Explain graphically and verbally....
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