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    Question about Economies of scope

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    1. (9-4) According to a statistical study, the following relationship exists between an electric light and the power plant's fuel costs (C) and its eight-hour output as a percent of capacity (Q):
    C = 16.68 + 0.125Q + 0.00439Q2

    a) When Q increases from 50 to 51, what is the increase in the cost of fuel for this electric plant?
    b) Of what use might the result in part a be to the plant's manager?
    c) Derive the marginal (fuel) cost curve for this plant, and indicate how it might be used by the plant's manager.

    HINTS:
    C = 16.68 + 0.125Q + 0.00439Q2
    a. At Q=50, C =
    At Q=51, C =
    Therefore the change in cost = C(at Q=51) - C(at Q=50) =
    b. Refer to text.
    c. C = 16.68 + 0.125Q + 0.00439Q2
    Marginal cost, MC = dC/dQ =
    At Q=50, MC =
    At Q=51, MC=
    Compare these to your answer in a.

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    https://brainmass.com/economics/economics-of-regulation/question-about-economies-of-scope-140762

    Solution Preview

    1. (9-4) According to a statistical study, the following relationship exists between an electric light and the power plant’s fuel costs (C) and its eight-hour output as a percent of capacity (Q):
    C = 16.68 + 0.125Q ...

    Solution Summary

    Economies of Scope are examined.

    $2.19