The above figure represents Tony's Pizza Parlor, a firm in monopolistic competition
a. What quantity will be produced?
b. What price will be charged?
c. What is Tony's total cost?
d. What is Tony's total revenue?
e. What is Tony's economic profit or loss?
f. Is this a long-run equilibrium? Why or why not?
a. 40 pizzas per day
b. $12.00 per pizza
c. $320
d. $480
e. Tony has an economic profit of $160.
f. This is not a long-run equilibrium because Tony is earning an economic profit. In the long run, new firms will enter and Tony's economic profit will be eliminated.
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