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A Firm with Market Power Faces the Following Estimated Demand Qd=39,000500P+0.4M8,000PRQ _ { d } = 39,000 - 500 P + 0.4 M - 8,000 P _ { R }

Question 62

Multiple Choice

A firm with market power faces the following estimated demand and average variable cost functions: Qd=39,000500P+0.4M8,000PRQ _ { d } = 39,000 - 500 P + 0.4 M - 8,000 P _ { R } AVC=300.005Q+0.0000005Q2A V C = 30 - 0.005 Q + 0.0000005 Q ^ { 2 } where QdQ _ { d } is quantity demanded,P is price,M is income,and PRP _ { R } is the price of a related good.The firm expects income to be $40,000 and PRP _ { R } to be $2.Total fixed cost is $100,000.What is the estimated demand function for the firm?


A) QdQ _ { d } = 71,000- 500P
B) QdQ _ { d } = 39,000- 200P
C) QdQ _ { d } = 39,000 - 500P
D) QdQ _ { d } = 40,000 -200P

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