Involve a Profit-Maximizing Monopolist $Q _ { d } = 142,000 - 500 P + 6 M - 400 P _ { R }$

question 1

Multiple Choice

Involve a profit-maximizing monopolist. Using time-series data, the demand function for the monopolist has been estimated as
$Q _ { d } = 142,000 - 500 P + 6 M - 400 P _ { R }$
where
$Q _ { d }$ is the amount sold, P is price, M is income, and
$P _ { R }$ is the price of a related good. The estimated values for M and
$P _ { R }$ in 2012 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:
$M C = 200 - 0.024 Q + 0.000006 Q ^ { 2 }$
Total fixed cost is forecast to be $500,000 in 2015.
-What is the optimal price?

• A) This is irrelevant since the firm will not produce in the short run.
• B) $200
• C) $250
• D) $408
• E) $520

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