Refer to the following:
A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results:
where P is price, M is income, and
is the price of a key input. The forecasts for the next year are
= $15,000 and
= $20. Average variable cost is estimated to be
Total fixed cost will be $6,000 next year.
-What will the firm's profit (loss) be:
A) $20,000
B) $26,000
C) $30,000
D) $36,000
E) -$6,000, the firm shuts down and loses only its fixed costs.
Correct Answer:
Verified
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