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 26

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 firm's profit?

• A)$1,470,000
• B)$1,200,000
• C)$1,600,000
• D)-$2,600,000

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Definitions:

Relevance

The quality of information that makes it useful for decision-making by accurately reflecting the financial situation of a business.

Representational Faithfulness

The quality of financial information that ensures it accurately reflects an entity's transactions and events without error or bias.

Financial Reporting

Generating financial statements that provide insight into an organization's economic status to its overseers, stakeholders, and governmental authorities.

Accounting Period

A specific duration of time used for financial reporting, usually a fiscal year or quarter.