Calculate the average total cost curve for typical gasoline

Assignment Help Business Economics

Reference no: EM131089662

The Los Angeles retail market for unleaded gasoline is fiercely price competitive. Consider the situation faced by a typical gasoline retailer when the local market price for unleaded gasoline is $2.50 per gallon and total cost (TC) and marginal cost (MC) relations are: TC = $156,250 + $2.25Q + $0.0000001Q2 MC = ?TC/?Q = $2.25 + $0.0000002Q and Q is gallons of gasoline. Total costs include a normal profit. A. Using the firm's marginal cost curve, calculate the profit-maximizing long-run supply from a typical retailer B. Calculate the average total cost curve for a typical gasoline retailer, and verify that average total costs are less than price at the optimal activity level.

Reference no: EM131089662

Questions Cloud

The long run this change will shift the industry : If firms enter a purely competitive industry, then in the long run this change will shift the industry: Demand curve to the left, and the individual firm's demand curve will shift down. Demand curve to the right, and the individual firm's demand curv..

The specific cancer site from the section drop-down menu : 1) What is the estimated number of new cancer cases for 2016, for all cancer sites combined? 2) What are the Top 3 Cancer Sites for Incidence (both sexes, all races)

Unemployment insurance benefits would influence : Do you think unemployment insurance benefits would influence the unemployment rate? Suggest some actions that the U.S. government might take to create more jobs.

Which of these situations describe an equilibrium : Which of these situations describe an equilibrium, and which does not? If not, what would an equilibrium look like? Remember that the definition of equilibrium means, in part, that there is no incentive or push/pull to change from the current describ..

Calculate the average total cost curve for typical gasoline : The Los Angeles retail market for unleaded gasoline is fiercely price competitive. Calculate the average total cost curve for a typical gasoline retailer, and verify that average total costs are less than price at the optimal activity level.

When museum is quiet-is it rival or non-rival in consumption : An economist gives the following advice to a museum director: “You should introduce “peak pricing”. At times when the museum has few visitors, you should admit visitors for free. And at times when the museum has many visitors, you should charge a hig..

List the measures used in the article authors study : In the space below, summarize the conclusions reached by the authors in the final seven paragraphs of their article. What were their interpretations of the study results? What limitations of their study and needed future research did they note?

How do changes in disposable income affect government : How do changes in disposable income affect government purchases and the government purchase function? How do changes in net taxes affect the consumption function?

Discuss effect of international trade on market structure : You have been hired as a consultant by your local mayor to look at the various market structures. Your role is to provide analysis and answers to these important questions that will help the mayor understand the structures of many of the businesses i..

User Account

All Pages