A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results Qd =25,000-5,000P+ 25M Q=240,000+ 5,000P-2,000P, where Pis price. Mis income, and Py is the price of a key input. The forecasts for the next year are M-$15,000 and P+-$20. Average variable cost is estimated to be AVC-14-0.008Q-0.0000020² Total fixed cost will be $6,000 next year. Suppose that income for next year is forecasted to be $9.000 instead. What is the profit-maximizing output choice for the firm?

A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results Qd =25,000-5,000P+ 25M Q=240,000+ 5,000P-2,000P, where Pis price. Mis income, and Py is the price of a key input. The forecasts for the next year are M-$15,000 and P+-$20. Average variable cost is estimated to be AVC-14-0.008Q-0.0000020² Total fixed cost will be $6,000 next year. Suppose that income for next year is forecasted to be $9.000 instead. What is the profit-maximizing output choice for the firm?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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