Using time-series data, the demand function for a profit-maximizing monopolist has been estimated asQd = 142,000 - 500P + 6M - 400PRwhere Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2014 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:MC = 200 - 0.024Q + 0.000006Q2Total fixed cost is forecast to be $500,000 in 2016.What is the average variable cost function?
A. AVC = 200 - 0.048Q + 0.000036Q2
B. AVC = 200 - 0.048Q + 0.000012Q2
C. AVC = 200 - 0.012Q + 0.000018Q2
D. AVC = 200 -0.012Q + 0.000002Q2
Answer: D
Economics
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