Asilekpe Company Limited is considering constructing a borehole in the village of Adukofe. The construction would cost Gh₵2 million and there will be no cost of maintenance. The following table shows the company’s anticipated demand over the lifetime of the bridge:Price per gallon (Gh₵)Number of gallons8071000006200000530000044000003500000260000017000000800000a. If the company were to construct the borehole what would be its profit-maximizing price? Would that be the efficient level of output? Explain your answer.b. If the company is interested in maximizing profit, should it construct the borehole? What would be its profit or loss?c. If the government were to construct the borehole, what price should it charge?d. Should the government construct the borehole? Explain.

The price at which highest amount of profit is possible is known as profit-maximizing price. An…

Answered: be no cost of maintenance. The…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Asilekpe Company Limited is considering constructing a borehole in the village of Adukofe. The construction would cost Gh₵2 million and there will be no cost of maintenance. The following table shows the company’s anticipated demand over the lifetime of the bridge:

Price per gallon (Gh₵)	Number of gallons
8	0
7	100000
6	200000
5	300000
4	400000
3	500000
2	600000
1	700000
0	800000

a. If the company were to construct the borehole what would be its profit-maximizing price? Would that be the efficient level of output? Explain your answer.

b. If the company is interested in maximizing profit, should it construct the borehole? What would be its profit or loss?

c. If the government were to construct the borehole, what price should it charge?

d. Should the government construct the borehole? Explain.

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