The Electric Company owns three power generators, each of which is painted a different color. During...

   

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The Electric Company owns three power generators, each of which is painted a different color. During any hour, the red generator can produce up to 500 kilowatt hours (kWh) at a cost of $1.00/kWh in raw materials. The blue generator can produce up to 200 kWh at a cost of $3.00/kWh in raw materials. The green generator can produce up to 100 kWh at a cost of $2.00/kWh in raw materials. Regardless of how much electricity is produced, the firm must pay its $100 to its workers according to a union contract. The machines are worth $100,000; if the firm did not own these machines, the money invested in the machines would be invested in bonds yielding 68c an hour. a. Graph this firm's marginal cost curve. b. In the short run, what are this firm's fixed costs? What are this firm's variable costs? c. In the long run, what costs are fixed? The Electric Company owns three power generators, each of which is painted a different color. During any hour, the red generator can produce up to 500 kilowatt hours (kWh) at a cost of $1.00/kWh in raw materials. The blue generator can produce up to 200 kWh at a cost of $3.00/kWh in raw materials. The green generator can produce up to 100 kWh at a cost of $2.00/kWh in raw materials. Regardless of how much electricity is produced, the firm must pay its $100 to its workers according to a union contract. The machines are worth $100,000; if the firm did not own these machines, the money invested in the machines would be invested in bonds yielding 68c an hour. a. Graph this firm's marginal cost curve. b. In the short run, what are this firm's fixed costs? What are this firm's variable costs? c. In the long run, what costs are fixed?

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