Refer to the Following:
Consider a Competitive Industry and a Price-Taking

question 27

Multiple Choice

Refer to the following:
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:
$$Q _ { d } = 10,000 - 10,000 P + 1.0 \mathrm { M }$$
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 2015:
$\hat { M } = \$ 50,000 \text { and } \hat { P } _ { I } = \$ 20$
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 2015.
-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

---

Definitions:

Electroconvulsive Therapy

A psychiatric treatment in which electric currents are passed through the brain, intentionally triggering a brief seizure, to provide relief from mental health conditions such as severe depression.

Dietary Restrictions

Guidelines or limitations on what individuals can eat due to health issues, ethical beliefs, or dietary preferences.

Newest Medications

The latest drugs and pharmaceuticals developed and introduced into the market for the treatment of various health conditions.

Tricyclics

A class of antidepressant drugs used to treat depression, characterized by their three-ring chemical structure.