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Suppose a municipal water utility must pay $360,000 per month for its quasi-fixed capital inputs, the water treatment plant and distribution lines to 12,000 homes. The figure below shows the demand and cost structure for this utility at various levels of water service. Quantity of water consumption is measured in 1,000-gallon units per month. AQFC is the average quasi-fixed cost curve, and LAC is long-run average cost. Long-run marginal cost, LMC, is constant and equal to $4 per 1,000-gallon unit. The inverse demand equation is P = 36 -0.0004Qd- (Answer with $ and commas for thousands, only include decimals when needed, i.e. not for whole dollar amounts). 3851 ▶ -AOPO 1. Find the value of costs in each of the blanks a through d in the figure. 2. When one firm produces 40,000 units of water service per month, the long-run total cost is $ per month. 3. If two equal-sized, but separate, water utilities were to provide the community with 40,000 units of water per month, the long- run total cost is $

Suppose a municipal water utility must pay $360,000 per month for its quasi-fixed capital inputs, the water treatment plant and distribution lines to 12,000 homes. The figure below shows the demand and cost structure for this utility at various levels of water service. Quantity of water consumption is measured in 1,000-gallon units per month. AQFC is the average quasi-fixed cost curve, and LAC is long-run average cost. Long-run marginal cost, LMC, is constant and equal to $4 per 1,000-gallon unit. The inverse demand equation is P = 36 -0.0004Qd- (Answer with $ and commas for thousands, only include decimals when needed, i.e. not for whole dollar amounts). 3851 ▶ -AOPO 1. Find the value of costs in each of the blanks a through d in the figure. 2. When one firm produces 40,000 units of water service per month, the long-run total cost is $ per month. 3. If two equal-sized, but separate, water utilities were to provide the community with 40,000 units of water per month, the long- run total cost is $

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 5MC
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Suppose a municipal water utility must pay $360,000 per month for its quasi-fixed capital inputs, the water treatment plant and distribution lines to 12,000 homes. The figure below shows the demand and cost structure for this utility at various levels of water service. Quantity of water consumption is measured in 1,000-gallon units per month. AQFC is the average quasi-fixed cost curve, and LAC is long-run average cost. Long-run marginal cost, LMC, is constant and equal to $4 per 1,000-gallon unit. The inverse demand equation is P = 36 -0.0004Qd. (Answer with $ and commas for thousands, only include decimals when needed, i.e. not for whole dollar amounts). Price and cooper 1800-palun) 30.55 20,000 40.000 MOR Qary (1,000-ganun per 6450 50,000 LAC -AOFC 2. When one firm produces 40,000 units of water service per month, the long-run total cost is $ LMC 1. Find the value of costs in each of the blanks a through d in the figure. per month. 3. If two equal-sized, but separate, water utilities were to provide the community with 40,000 units of water per month, the long- run total cost is $
Transcribed Image Text:Suppose a municipal water utility must pay $360,000 per month for its quasi-fixed capital inputs, the water treatment plant and distribution lines to 12,000 homes. The figure below shows the demand and cost structure for this utility at various levels of water service. Quantity of water consumption is measured in 1,000-gallon units per month. AQFC is the average quasi-fixed cost curve, and LAC is long-run average cost. Long-run marginal cost, LMC, is constant and equal to $4 per 1,000-gallon unit. The inverse demand equation is P = 36 -0.0004Qd. (Answer with $ and commas for thousands, only include decimals when needed, i.e. not for whole dollar amounts). Price and cooper 1800-palun) 30.55 20,000 40.000 MOR Qary (1,000-ganun per 6450 50,000 LAC -AOFC 2. When one firm produces 40,000 units of water service per month, the long-run total cost is $ LMC 1. Find the value of costs in each of the blanks a through d in the figure. per month. 3. If two equal-sized, but separate, water utilities were to provide the community with 40,000 units of water per month, the long- run total cost is $
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