Determine the output level that minimizes short-run average

Reference no: EM13214280

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.

Reference no: EM13214280

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