Question

In: Economics

The market demand for a monopoly firm is estimated to be: Qd= 100,000 − 500P +...

The market demand for a monopoly firm is estimated to be:

Qd= 100,000 − 500P + 2M + 5,000PR

where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $50,000 and $20, respectively, in 2021. The average variable cost function is estimated to be

AVC = 520 − 0.03Q + 0.000001Q2

Total fixed cost in 2021 is expected to be $4 million. The firm's profit is

Multiple Choice

  • $100,000.

  • $200,000.

  • $375,000.

  • −$182,000.

  • $800,000.

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
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