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A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results: Q d = 25,000 - 5,000 P
A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results:
Qd = 25,000 - 5,000P + 25M
Qs = 240,000 + 5,000P - 2,000Pi
where P is price, M is income, and Pi is the price of a key input. The forecasts for the next year are M = $15,000 and Pi = $20. Average variable cost is estimated to be AVC = 14 - 0.008Q + 0.000002Q2. Total fixed cost will be $6,000 next year.
What is the price forecast for next year?
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