Refer to the following:
A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results:
$$\mathrm { Q } _ { \mathrm { d } } = 25,000 - 5,000 P + 25 M$$
$$Q _ { 5 } = 240,000 + 5,000 P - 2,000 P _ { I }$$
where P is price, M is income, and
$P _ { I }$ is the price of a key input. The forecasts for the next year are
$\hat { M }$ = $15,000 and
$\hat { P } _ { I }$ = $20. Average variable cost is estimated to be
$A V C = 14 - 0.008 Q + 0.000002 Q ^ { 2 }$
Total fixed cost will be $6,000 next year.
-Suppose that income next year is forecasted to be $10,000 instead. What will the firm's profit (loss) be?

Question

Refer to the following:
A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results:
 $$\mathrm { Q } _ { \mathrm { d } } = 25,000 - 5,000 P + 25 M$$ 
 $$Q _ { 5 } = 240,000 + 5,000 P - 2,000 P _ { I }$$ 
where P is price, M is income, and
 $P _ { I }$ is the price of a key input. The forecasts for the next year are
 $\hat { M }$ = $15,000 and
 $\hat { P } _ { I }$ = $20. Average variable cost is estimated to be
 $A V C = 14 - 0.008 Q + 0.000002 Q ^ { 2 }$ 
Total fixed cost will be $6,000 next year.
-Suppose that income next year is forecasted to be $10,000 instead. What will the firm's profit (loss) be?

Quizplus · Accepted Answer

With the new income forecast, calculate the equilibrium price and quantity, then determine total revenue and total cost to find the profit or loss.

Refer to the Following: a Consulting Company Estimated Market Demand Qd=25,000−5,000P+25M\mathrm { Q } _ { \mathrm { d } } = 25,000 - 5,000 P + 25 MQd​=25,000−5,000P+25M

Refer to the Following:
a Consulting Company Estimated Market Demand $\mathrm { Q } _ { \mathrm { d } } = 25,000 - 5,000 P + 25 M$