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.
-Suppose income next year is forecasted to be $10,000 instead. What is the profit-maximizing output choice for the firm?
A) 8,000
B) 5,548
C) 3,480
D) 2,167
E) zero
Correct Answer:
Verified
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