A firm with market power faces the following estimated demand and average variable cost functions: Qd = 39,000 - 500P + 0.4M - 8,000PR AVC= 30 -0.005Q + 0.000000502 where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the firm's profit? A. $220,000 B. $147,000

A firm with market power faces the following estimated demand and average variable cost functions: Qd = 39,000 - 500P + 0.4M - 8,000PR AVC= 30 -0.005Q + 0.000000502 where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the firm's profit? A. $220,000 B. $147,000

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 31P: Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as...

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