Consider a competitive industry and a price-taking firm that produces in that industry. The market demand and supply functions are estimated to be: Demand: Qd = 10,000 ? 10,000P + 1.0MSupply: Qs = 80,000 + 10,000P ? 4,000PIwhere Q is quantity, P is the price of the product, M is income, and PI is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of M and PI for 2015:
= $50,000 and 
I = $20The manager also estimates the average variable cost function to beAVC = 3.0 ?
0.0027Q + 0.0000009Q2Total fixed costs will be $2,000 in 2015. The marginal cost function is:
A. SMC = 3.0 ? 0.0054Q + 0.0000018Q2
B. SMC = 3.0 ? 0.0027Q + 0.0000009Q2
C. SMC = 3.0 ? 0.00135Q + 0.00000045Q2
D. SMC = 3.0Q ? 0.0027Q2 + 0.0000009Q3
E. none of the above
Answer: E
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