Wednesday

April 23, 2014

April 23, 2014

Posted by **Mo** on Thursday, September 6, 2007 at 5:26pm.

EPS has fixed costs of US$3500. The manager has estimated the following marginal cost function for EPS, using data for the last two years:

MC = 125 – 0.42Q + 0.0021Q2

Where MC is measured in dollars and Q is the number of pools serviced each summer. Each of the estimated coefficients is statistically significant at the 95 percent confidence level.

• Given the estimated marginal cost function, what is the average variable cost function for EPS?

• At what output level does AVC reach its minimum value? What is the value of AVC at its minimum point?

• Should the manager of EPS continue to operate, or should the firm shut down? Explain.

• The manager of EPS finds two output levels that appear to be optimal. What are these levels of output and which one is actually optimal?

• How much profit (or loss) can the manager of EPS expect to earn?

• Suppose that EPS fixed costs rise to US$4000. How does this affect the optimal level of output? Explain.

**Related Questions**

Managerial Economics - Everkleen Pool Services (EPS) provides weekly swimming ...

economics - Ever Kleen Pool Services provides weekly swimming pool maintenance ...

spanish - how do you say pool in spanish? piscina = pool charca is pool If you ...

Accounting - Patty Piper recently began a swimming pool chlorination service. ...

math - Im doing my homework and it provides barely any info. here is the ...

Pre Calc - A swimming pool can be filled by a vent in 10 hours. When the pool is...

math question - A pool company will install a round swimming pool in the middle ...

Physics - A light source, S, is located 2.9 m below the surface of a swimming ...

math - a rectangular swimming pool is 15 yds x 25 yds. the bottom of the pool ...

math - a certain company makes inflatable swimming pools that come in four ...