profit maximization price combination A state owned company is providing electricity at the price of $0.105and faces the demand for electricity P=1.255 - 0.001Q The company has a cost function C(Q)=100.625 + 0.105Q The state sells the firm, now the firm’s only goal is profit maximization a What is the number of kilowatt hours of electricity produced and what is the price that the company will charge? b Compute the price elasticity at the profit maximizing price combination c How much more profit will this firm make as a result of privatization
profit maximization price combination A state owned company is providing electricity at the price of $0.105and faces the demand for electricity P=1.255 - 0.001Q The company has a cost function C(Q)=100.625 + 0.105Q The state sells the firm, now the firm’s only goal is profit maximization a What is the number of kilowatt hours of electricity produced and what is the price that the company will charge? b Compute the price elasticity at the profit maximizing price combination c How much more profit will this firm make as a result of privatization
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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profit maximization
A state owned company is providing electricity at the price
of $0.105and faces the demand for electricity P=1.255 - 0.001Q The company has a
cost function C(Q)=100.625 + 0.105Q The state sells the firm, now the firm’s
only goal is profit maximization
a What is the number of kilowatt hours of electricity
produced and what is the price that the company will charge?
b Compute the price elasticity at the profit maximizing
price combination
c How much more profit will this firm make as a result of
privatization
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