(a) The short-run average total cost can never be less than the long-run average total cost.

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Answer 1

Question

Chapter 6, Problem 12P

To determine

(a)

The short-run average total cost can never be less than the long-run average total cost.

To determine

(b)

The short-run average variable cost can never be less than the long-run average total cost.

To determine

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

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1. Case 0) Baseline case Table 1: Power Plant Capacity and Marginal Cost: Case 0 Plant # Energy Source Capacity (MW) MC (S/MWh) 1 Coal 300 45 2 Oil 100 90 3 4 Natural Gas Nuclear 500 50 600 0 (a) Calculate the capacity mix of this market by energy source. (b) Draw a supply curve of this wholesale generation market. Table 2 below shows the demand levels for selected hours of a representative day. We will consider only these four hourly markets for our analysis. Note that the 6 PM demand is the highest demand level of the day. Table 2: Hourly Demand (selected hours) Hour Demand (MWh) 4 AM 500 10 AM 700 2 PM 800 6 PM 1000 (c) Find the market clearing prices and calculate how much electricity each power plant generates in the hourly market (4AM, 10AM, 2PM, and 6PM). (d) Find the average price of electricity (by taking a simple average of hourly prices; [P(4am) + P(10AM) + P(2PM) + P(6PM)]/4).

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Answer 2

Question

Chapter 6, Problem 12P

To determine

(a)

The short-run average total cost can never be less than the long-run average total cost.

To determine

(b)

The short-run average variable cost can never be less than the long-run average total cost.

To determine

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

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Answer 3

Question

Chapter 6, Problem 12P

To determine

(a)

The short-run average total cost can never be less than the long-run average total cost.

To determine

(b)

The short-run average variable cost can never be less than the long-run average total cost.

To determine

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

Expert Solution & Answer

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Answer 4

Question

Chapter 6, Problem 12P

To determine

(a)

The short-run average total cost can never be less than the long-run average total cost.

To determine

(b)

The short-run average variable cost can never be less than the long-run average total cost.

To determine

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

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Answer 5

Chapter 6, Problem 12P

To determine

(a)

The short-run average total cost can never be less than the long-run average total cost.

To determine

(b)

The short-run average variable cost can never be less than the long-run average total cost.

To determine

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

Answer 6

Chapter 6, Problem 12P

To determine

(a)

The short-run average total cost can never be less than the long-run average total cost.

Answer 7

Chapter 6, Problem 12P

To determine

(a)

The short-run average total cost can never be less than the long-run average total cost.

Answer 8

To determine

(b)

The short-run average variable cost can never be less than the long-run average total cost.

Answer 9

To determine

(b)

The short-run average variable cost can never be less than the long-run average total cost.

Answer 10

To determine

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

Answer 11

To determine

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 6 - Prob. 1P Ch. 6 - Prob. 2P Ch. 6 - Prob. 3P Ch. 6 - Prob. 4P Ch. 6 - Prob. 5P Ch. 6 - Prob. 6P Ch. 6 - Prob. 7P Ch. 6 - Prob. 8P Ch. 6 - Prob. 9P Ch. 6 - Prob. 10P

(a) The short-run average total cost can never be less than the long-run average total cost.

(a) The short-run average total cost can never be less than the long-run average total cost.

(b) The short-run average variable cost can never be less than the long-run average total cost.

(c) In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.

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Chapter 6 Solutions

(a)

The short-run average total cost can never be less than the long-run average total cost.

(b)

The short-run average variable cost can never be less than the long-run average total cost.

(c)

In the long run, choosing a higher level of fixed cost shifts the long run average total cost curve upwards.