A Price-Setting Firm Faces the Following Estimated Demand and Average $Q _ { d } = 800,000 - 2,000 P + 0.7 M + 4,000 P _ { R }$

question 72

Multiple Choice

A price-setting firm faces the following estimated demand and average variable cost functions: $Q _ { d } = 800,000 - 2,000 P + 0.7 M + 4,000 P _ { R }$ $A V C = 500 - 0.03 Q + 0.000001 Q ^ { 2 }$ where $Q _ { d }$ is the quantity demanded,P is price,M is income,and $P _ { R }$ is the price of a related good.The firm expects income to be $40,000 and $P _ { R }$ to be $53.Total fixed cost is $2,600,000.What is the estimated marginal revenue function for the firm?

• A)MR = 800 - 0.002Q
• B)MR = 800 -0.004Q
• C)MR = 1,600 - 0.004Q
• D)MR = 520-0.001Q

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