Consider a Competitive Industry and a Price-Taking Firm That Produces $Q _ { d } = 10,000 - 10,000 P + 1.0 M$

question 94

Multiple Choice

Consider a competitive industry and a price-taking firm that produces in that industry.The market demand and supply functions are estimated to be: Demand: $Q _ { d } = 10,000 - 10,000 P + 1.0 M$ Supply: $Q _ { s } = 80,000 + 10,000 P - 4,000 P _ { I }$ where Q is quantity,P is the price of the product,M is income,and $$P _ { I }$$ is the input price.The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of M and $P _ { I }$ for 2021: $\hat { M } = \$ 50,000 \text { and } \hat { P } _ { I } = \$ 20$ The manager also estimates the average variable cost function to be $A V C = 3.0 - 0.0027 Q + 0.0000009 Q ^ { 2 }$ Total fixed costs will be $2,000 in 2021.The manager _____ produce since _____________.

• A)should; $3 > $0.975
• B)should; $2.75 > $0.75
• C)should not; $2 < $2.15
• D)should not; $0.50 < $1.00

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Definitions:

Larceny

The unlawful taking of personal property with the intent to deprive the rightful owner of it permanently.

Forgery

The act of falsely making or altering a document with the intent to deceive.

Computer Fraud

The illegal act of using a computer to alter or fake electronic data for personal gain or to deceive others.

Access Device Fraud

Illegal use or possession of devices like credit cards or PINs to fraudulently obtain money or goods.