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 $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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