100b_mt1_q147

100b_mt1_q147 - <Midterm Answer Keys - Bryan> #1....

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< Midterm Answer Keys - Bryan > C ( y ) = 1 2 y 3 3 y 2 + y + 80 shut down price. (recall, in the SR, MC=AVC) short run when the price is equal to MC and AVC. That is, P = MC = AV C MC = C 0 ( y ) = 3 2 y 2 6 y + 1 AV C = C ( y ) y = 1 2 y 2 3 y + 1 Let MC = AV C: Then 3 2 y 2 6 y + 1 = 1 2 y 2 3 y + 1 3 2 y 3 6 y 2 + y = 1 2 y 3 3 y 2 + y y 3 3 y 2 = 0 y = 0 or 3 The tagent line of MC at y = 0 (that is, take derivative of MC and evaluate at y = 0 ) is MC 0 (0) = 3 2 2(0) 6 = 6 < 0 So, at y = 0 ; MC will decrease if you increase y: minimize its cost by increasing y: The tagent line of MC at y = 3 (that is, take derivative of MC and evaluate at y = 3 ) is MC 0 (3) = 3 2 2(3) 6 = 3 > 0 So, at y = 3 ; MC will increase if you increase y: That is,
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This note was uploaded on 12/09/2010 for the course ECON 100B taught by Professor Rauch during the Spring '07 term at UCSD.

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100b_mt1_q147 - &lt;Midterm Answer Keys - Bryan&gt; #1....

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