This topic contains a solution. Click here to go to the answer

Author Question: Ed's construction company has the following short-run cost function: q3 - 10q2 + 36q. a. What ... (Read 71 times)

kwoodring

  • Hero Member
  • *****
  • Posts: 560
Ed's construction company has the following short-run cost function: q3 - 10q2 + 36q.
 
  a. What level of output will minimize the average cost? What is the AC at this point?
  b. Does the production process indicate diminishing returns? How can you tell?

Question 2

Consider a car dealership that advertises a three-year lease at 250 per month. When you arrive to apply, you discover that the lease requires a down payment of 3600 dollars. You will undertake the lease if
 
  A) you value the lease at least 350 per month.
  B) you value the lease at least 250 per month, the 3600 is a sunk cost.
  C) you value the lease less than 350 per month.
  D) you value buying a new car at 400 per month.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

deja

  • Sr. Member
  • ****
  • Posts: 332
Answer to Question 1

a. When dAC/dq=0 or equivalently AC=MC, the AC is at a minimum. To derive:
AC = q2 - 10q + 36
MC = 3q2 - 20q + 36
Setting these equal
2q2 - 10q = 0
Solve to get q=5. Plug back into the AC to get AC = 25 - 50 + 36 = 11
b. The MC curve initially decreases but eventually rises. To see this, look at
dMC/dq = 6q - 20
When q > 10/3, the MC is rising. Since MC = w/MP, this implies the MP is decreasing.

Answer to Question 2

A




kwoodring

  • Member
  • Posts: 560
Reply 2 on: Jul 1, 2018
Thanks for the timely response, appreciate it


cici

  • Member
  • Posts: 325
Reply 3 on: Yesterday
Excellent

 

Did you know?

Adult head lice are gray, about ? inch long, and often have a tiny dot on their backs. A female can lay between 50 and 150 eggs within the several weeks that she is alive. They feed on human blood.

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

Did you know?

Certain rare plants containing cyanide include apricot pits and a type of potato called cassava. Fortunately, only chronic or massive ingestion of any of these plants can lead to serious poisoning.

Did you know?

Women are two-thirds more likely than men to develop irritable bowel syndrome. This may be attributable to hormonal changes related to their menstrual cycles.

For a complete list of videos, visit our video library