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 = $20 The manager also estimates the average variable cost function to beAVC = 3.0 ?
0.0027Q + 0.0000009Q2Total fixed costs will be $2,000 in 2015. Average variable cost reaches its minimum value of ________ units of output.
A. 2,000
B. 1,500
C. 2,500
D. 1,000
Answer: B
You might also like to view...
Suppose that the equilibrium price of pickles falls while the equilibrium quantity rises. The most likely explanation for these changes is:
A. a decrease in the supply of pickles. B. a decrease in demand for pickles. C. an increase in demand for pickles. D. an increase in the supply of pickles.
A firm with market power will maximize profit by hiring the amount of an input at which the
A. last unit of the input hired adds the same amount to total output as to total cost. B. additional output from the last unit of the input hired exceeds the additional cost of the last unit by the largest amount. C. additional revenue from the last unit of the input hired exceeds the additional cost of the last unit by the largest amount. D. last unit of the input hired adds the same amount to total revenue as to total cost.
Elmo's gas station in El Paso only sells gasoline if customers also purchase its car wash service
A) This is called a tie-in sale and is in violation of antitrust laws. B) This is not in violation of antitrust laws, as cars need both gasoline and car wash. C) This is not in violation of antitrust laws, as consumers get the gasoline below market prices. D) This is in violation of the Robinson-Patman Act.
The value of what KFC produces in Japan is included in the U.S. ________ and in the Japanese ________.
A. GDP; GNP B. GNP; GNP C. GDP; GDP D. GNP; GDP