Assume an Electric Company Has Spent $3 Billion on a Nuclear

Essay

Assume an electric company has spent $3 billion on a nuclear power plant. It's producing at a price per kilowatt hour that is above its average variable cost. However, after 10 years the price remains below average total cost. If there is no expectation that price will equal or rise above the average total cost what would you expect this company to do with its nuclear power plant? Why is the $3 billion not part of the decision? Explain.