Explain idea of producing electricity by burning coal


Suppose your firm produces electricity by burning coal. Currently it buys central Appalachia 12,500 BTU per ton coal at the market price of $52 per ton. The Board of Directors has informed you that currently the average cost of producing that coal is only $35 per ton. They therefore are considering buying the mine because this would save them $17 per ton of coal burned. (Each 500 megawatt power plant your firm owns burns about 1.4 million tons of coal per year.) They have asked you whether this is a good idea. What do you say?

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: Explain idea of producing electricity by burning coal
Reference No:- TGS0514580

Expected delivery within 24 Hours