A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Qd = 25,000 - 5,000P+ 2.5M Qs = 240,000 + 5,000P - 2,000P1 where Pis price, M is income, and P, 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 + 0.00000202 Total fixed cost will be $6,000 next year. What is the profit-maximizing output choice for the firm? O 3,000 units O 4,000 units O 5,000 units O 6,000 units

A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Qd = 25,000 - 5,000P+ 2.5M Qs = 240,000 + 5,000P - 2,000P1 where Pis price, M is income, and P, 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 + 0.00000202 Total fixed cost will be $6,000 next year. What is the profit-maximizing output choice for the firm? O 3,000 units O 4,000 units O 5,000 units O 6,000 units

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

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 6E

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