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chapter10ans - Answers to the Problems Labor(workers...

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Unformatted text preview: Answers to the Problems Labor (workers) AP (surfboards per worker) Output (surfboards) MP (surfboards per worker) TC (dollars) MC (dollars per surfboa rd) ÷ ÷ ÷ ÷ AVC (dollars per surfboa rd) ÷ ÷ ÷ c. We use more than one type of plant for at least three reasons. First, hydroelectric plants might be the least expensive to operate, but they must be near rapidly flowing rivers. Second, the scale of the electricity that is demanded needs to be examined. For instance, at some locations so much electricity is demanded that hydroelectric plants (or other type of plants) are operating where there are diseconomies of scale that raise their long-run average cost. In these locations, some other plant, perhaps gas or nuclear, might have lower average costs for the quantity of electricity demanded. Third, the price of natural gas, coal, oil, and nuclear fuel can vary tremendously. By having different types of plants some protection is gained against having a concentration in a type of plant whose costs happened to soar. ...
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