Question: Louie started a pizza shop called Laker Pizza. The pizza shop is in a perfectly competitive market that has an equilibrium price of $10.00
Variable Cost is based on number of employees hired. Each employee cost $50

Complete the table and answer the questions below.

Employees Output Total Cost Variable Cost
0 0 $50.00
1 8
3 30
4 38
7 53
10 65

What is the profit-maximizing output?

Is the pizza shop showing an economic profit or an economic loss?

What is the total profit/loss at the profit-maximizing output?

What is the minimum price Louie can accept before he shuts down?

Assume competitive pressure pushes prices down to $6.25, would you advise Louie to shut-down in the short-run?

Would you advise Louie to exit the market in the long-run?

Create a graph in Excel that shows all three cost curves and marginal revenue.   Edit