Consider a competitive industry and a price-taking firm that produces in that industry. The market demand and supply functions are estimated to be: Demand: Qd=10,000 - 10,000P+1.0M Supply: Qs = 80,000 + 10,000P-4,000P1 where Q is quantity, Pis the price of the product, Mis income, and P1 is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of Mand P₁ for 2021: M= $50,000 and P₁= $20 The manager also estimates the average variable cost function to be AVC=3.0-0.0027Q+0.0000009Q² Total fixed costs will be $2,000 in 2021. Average variable cost reaches its minimum value of units of output.

Consider a competitive industry and a price-taking firm that produces in that industry. The market demand and supply functions are estimated to be: Demand: Qd=10,000 - 10,000P+1.0M Supply: Qs = 80,000 + 10,000P-4,000P1 where Q is quantity, Pis the price of the product, Mis income, and P1 is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of Mand P₁ for 2021: M= $50,000 and P₁= $20 The manager also estimates the average variable cost function to be AVC=3.0-0.0027Q+0.0000009Q² Total fixed costs will be $2,000 in 2021. Average variable cost reaches its minimum value of units of output.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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