Suppose the Fixed Cost of Building a Nuclear Power Plant

question 9

Multiple Choice

Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?

• A) The marginal cost is falling.
• B) The marginal cost is equal to $.01.
• C) The marginal cost is equal to $1.01.
• D) The marginal cost is rising.

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Definitions:

Fertilisation

The fusion of gametes (egg and sperm) to initiate the development of a new individual organism.

Zygote

The initial cell formed when a sperm cell fertilizes an egg cell, representing the earliest stage of embryonic development.

Egg

A reproductive cell produced by female organisms, capable of developing into a new individual upon fertilization.

Phenotype

The observable physical or biochemical characteristics of an organism, as determined by both genetic makeup and environmental influences.