#41 -The market demand for a monopoly firm is estimated to be:

Q_d= 100,000 500P+ 2M+ 5,000P_R

whereQ_dis quantity demanded,Pis price,Mis income, andP_Ris the price of a related good. The manager has forecasted the values ofMandP_Rwill be $50,000 and $20, respectively, in 2021. The average variable cost function is estimated to be

AVC= 520 0.03Q+ 0.000001Q²

Total fixed cost in 2021 is expected to be $4 million. The manager should _____ because_____.

Multiple Choice

• shut down;P= $520 <TVC= $320
• shut down;P= $480 <AVC= $500
• operate;P= $560 >AVC= $320
• operate;P= 480 >AVC= $300