A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Qd = 25,000 - 5,000P+ 25M Qs = 240,000 + 5,000P-2,000P₁ where P is price, M is income, and P₁ is the price of a key input. The forecasts for the next year are M = $15,000 and P₁= $20. Average variable cost is estimated to be AVC=14-0.008Q+0.000002Q² Total fixed cost will be $6,000 next year. Suppose that income next year is forecasted to be $10,000 instead. What will the firm's profit (loss) be? Multiple Choice zero $2,500 -$3,550 -$2,860 -$6,000

A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Qd = 25,000 - 5,000P+ 25M Qs = 240,000 + 5,000P-2,000P₁ where P is price, M is income, and P₁ is the price of a key input. The forecasts for the next year are M = $15,000 and P₁= $20. Average variable cost is estimated to be AVC=14-0.008Q+0.000002Q² Total fixed cost will be $6,000 next year. Suppose that income next year is forecasted to be $10,000 instead. What will the firm's profit (loss) be? Multiple Choice zero $2,500 -$3,550 -$2,860 -$6,000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 6E: The economic analysis division of Mapco Enterprises has estimated the demand function for its line...

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A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Qd = 25,000 − 5,000P + 25M Qs = 240,000 + 5,000P − 2,000P1 where P is price, M is income, and P1 is the price of a key input. The forecasts for the next year are M̂ = $15,000 and P̂1 = $20. Average variable cost is estimated to be AVC = 14 − 0.008Q + 0.000002Q2 Total fixed cost will be $6,000 next year. Suppose that income next year is forecasted to be $10,000 instead. What will the firm’s profit (loss) be? rev: 12_18_2019_QC_CS-192688 Multiple Choice zero $2,500 −$3,550 −$2,860 −$6,000
A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Qd = 25,000 − 5,000P + 25M Qs = 240,000 + 5,000P − 2,000P1 where P is price, M is income, and P1 is the price of a key input. The forecasts for the next year are M̂ = $15,000 and p̂1 = $20. Average variable cost is estimated to be AVC = 14 − 0.008Q + 0.000002Q2 Total fixed cost will be $6,000 next year. What is the firm's minimum average variable cost? a. $8 b. $2 c. $20 d. $6
A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Qd = 25,000 − 5,000P + 25M Qs = 240,000 + 5,000P − 2,000P1 where P is price, M is income, and P1 is the price of a key input. The forecasts for the next year are M̂ = $15,000 and p̂1 = $20. Average variable cost is estimated to be AVC = 14 − 0.008Q + 0.000002Q2 Total fixed cost will be $6,000 next year. What will the firm's profit (loss) be? a. $26,000 b. $20,000 c. −$6,000, the firm shuts down and loses only its fixed costs. d. $30,000 e. $36,000
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You are the manager of a firm that sells a “commodity” in a market that resembles perfect competition, and your analytics team estimates that your cost function is C(Q) = 2Q + 2Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain the price that will prevail in the market. You believe that there is a 65 percent chance the market price will be $200 and a 35 percent chance it will be $400. Calculate the expected market price. $ What output should you produce in order to maximize expected profits? units What are your expected profits? $
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