Amy Hemphill ECO550 Chapters 9 & 10 Check Your Understanding

Amy Hemphill

ECO 550 Chapters 9 & 10 Check Your Understanding

 

Chapter 9—3, 4, & 5 

 

#3

a. VC = AVC(Q)
VC = 1.24Q + .0033Q2 + .0000029Q3 − .000046Q2Z − .026QZ + .00018QZ2
b. MC = 1.24 + .0066Q + .0000087Q2 − .000092QZ − .026Z   + .00018Z2
c. Z = 150(thousand) kilowatts

SRAVC = 1.24 + .0033Q + .0000029Q2 − .000046Q(150) − .026(150) + .00018(150)2

SRAVC = 1.39 − .0036Q + .0000029Q2SRMC = 1.24 + .0066Q + .0000087Q2 − .000092Q(150)   − .026(150) + .00018(150)2SRMC = 1.39 − .0072Q + .0000087Q2
d. d(SRAVC)/dQ = 0 (condition for minimum SRAVC) =   −.0036 + .0000058Q = 0  Q* = 620.7 (million) kilowatt-hours/year
e. SRAVC = 1.39 − .0036(620.7) + .0000029(620.7)2   = .27 pence
SRMC = 1.39 − .0072(620.7) + .0000087(620.7)2 = .27 pence
The two are equal, as the MC slices up through the lowest point in the AVC curve.

 

#4.  
a.   A decrease in P leads to an increase in the breakeven point.
b.   An increase in V leads to an increase in the breakeven point.
c.   An increase in F leads to an increase in the breakeven point.

 

Amy Hemphill ECO550 Chapters 9 & 10 Check Your Understanding

Amy Hemphill ECO 550 Chapters 9 & 10 Check Your Understanding Chapter 9—3, 4, & 5 #3 a. VC = AVC(Q) VC = 1.24Q + .0033Q2 + .0000029Q3 − .000046Q2Z − .026QZ + .00018QZ2 b. MC = 1.24 + .0066Q + .0000087Q2 − .000092QZ − .026Z + .00018Z2 c. Z = 150(th...

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