Using time-series data, the demand function for a profit-maximizing monopolist has been estimated as Qd = 142,000 − 500P + 6M − 400PR where Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2021 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as: MC = 200 − 0.024Q + 0.000006Q2 Total fixed cost is forecast to be $500,000 in 2021. What is the profit-maximizing (or loss-minimizing) level of production? a. 1,000 units b. 0 units, the firm should shut down. c. 1,800 units d. 8,000 units e. 2,000 units
Using time-series data, the demand function for a profit-maximizing monopolist has been estimated as Qd = 142,000 − 500P + 6M − 400PR where Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2021 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as: MC = 200 − 0.024Q + 0.000006Q2 Total fixed cost is forecast to be $500,000 in 2021. What is the profit-maximizing (or loss-minimizing) level of production? a. 1,000 units b. 0 units, the firm should shut down. c. 1,800 units d. 8,000 units e. 2,000 units
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Using time-series data, the demand function for a profit-maximizing monopolist has been estimated as
Qd = 142,000 − 500P + 6M − 400PR
where Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2021 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:
MC = 200 − 0.024Q + 0.000006Q2
Total fixed cost is
a.
1,000 units
b.
0 units, the firm should shut down.
c.
1,800 units
d.
8,000 units
e.
2,000 units
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