### Estimating breakeven quantity

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##### Reference no: EM1316836

In 1971, Congress conducted headings on emergency loan guarantee legislation for Lockheed Corporation, which was in the middle of a severe liquidity crisis due to losses on a number of military contracts.  The loan guarantee was intended to allow the company to complete development of the L-1011 Tri-Star program (production of a new commercial aircraft).
One estimate of the average cost (in millions of dollars) per aircraft during the program was AC = 100(TQ) -.5 = 100/SQRT(TQ), where TQ demotes the total number of aircraft produces to date.  What is the average cost of the first aircraft> The 2nd?  The 49th?  The 100th?  For every doubling of cumulative output, by what percentage does average cost decline?

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