. A study of costs of electricity generation for a sample of 56 British firms in

Question

. A study of costs of electricity generation for a sample of 56 British firms in the 1946-1947 yielded the following long-run cost function: AVC = 1.24 +.0033Q + .0000029Q2 - .000046QZ - .026Z + .00018Z2 Where AVC = average variable cost (i.e., working costs of generation), measured in pence per kilowatt hour (kwh). (A pence was a British monetary unit equal, at that time, to 2 cents U.S.). Q = output, measured in millions of kWh per year Z = plant size, measured in thousands of kilowatts C. Holding plant size equal to 150,000 kilowatts, determine the output level that minimizes short-run average variable cost and marginal cost functions for electricity generation.

Explanation / Answer

Assume that x-y moves are made at a distance of 0.5 in above the work ... A study of the costs of electricity generation for a sample of 56 British firms in ... firms in 1946 1947 yielded the following long-run cost function: AVC = 1.24 + .0033Q + .0000029Q2 .000046QZ .026Z + .00018Z2 where AVC = average variable cost (i.e., ..

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