. The second-largest public utility in the nation is the sole provider of electricity in 32 counties of southern Florida. To meet the monthly demand for electricity in these counties, which is given by the inverse demand function P = 1,200 − 4Q, the utility company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2 (so Q = Q1 + Q2). The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q21and C2(Q2) = 6,000 + 3Q22, respectively. Determine the profit-maximizing amounts of electricity to produce at the two facilities, the optimal price, and the utility company’s profits.

Given, the demand function is: With the help of given equations profit function can be determined…

Answered: . The second-largest public utility in…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 6E

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. The second-largest public utility in the nation is the sole provider of electricity in 32 counties of southern Florida. To meet the monthly demand for electricity in these counties, which is given by the inverse demand function P = 1,200 − 4Q, the utility company has set up two electric generating facilities: Q₁ kilowatts are produced at facility 1 and Q₂ kilowatts are produced at facility 2 (so Q = Q₁ + Q₂). The costs of producing electricity at each facility are given by C₁(Q₁) = 8,000 + 6Q²₁and C₂(Q₂) = 6,000 + 3Q²₂, respectively. Determine the profit-maximizing amounts of electricity to produce at the two facilities, the optimal price, and the utility company’s profits.

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