A power company faces demands during both peak andoff-peak times. If a price of p1 dollars per kilowatt-hour ischarged during the peak time, customers will demand 60 0.5 p1 kwh of power. If a price of p2 dollars is chargedduring the off-peak time, then customers will demand 40 p2 kwh. The power company must have sufficient capacityto meet demand during both the peak and off-peak times. Itcosts $10 per day to maintain each kilowatt-hour of capacity.Determine how the power company can maximize dailyrevenues less operating costs.
A power company faces demands during both peak andoff-peak times. If a price of p1 dollars per kilowatt-hour ischarged during the peak time, customers will demand 60 0.5 p1 kwh of power. If a price of p2 dollars is chargedduring the off-peak time, then customers will demand 40 p2 kwh. The power company must have sufficient capacityto meet demand during both the peak and off-peak times. Itcosts $10 per day to maintain each kilowatt-hour of capacity.Determine how the power company can maximize dailyrevenues less operating costs.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
A power company faces demands during both peak and
off-peak times. If a price of p1 dollars per kilowatt-hour is
charged during the peak time, customers will demand 60
0.5 p1 kwh of power. If a price of p2 dollars is charged
during the off-peak time, then customers will demand 40
p2 kwh. The power company must have sufficient capacity
to meet demand during both the peak and off-peak times. It
costs $10 per day to maintain each kilowatt-hour of capacity.
Determine how the power company can maximize daily
revenues less operating costs.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education