[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities:Q1 kilowatts are produced at facility 1 andQ2 kilowatts are produced at facility 2; where Q = Q1 + Q2. The costs of producing electricity at each facility are given byC1(Q1) = 8,000 + 6Q1C2(Q2) = 6,000 + 3Q2 + 5Q22 Calculate the profit maximizing output levels of each factory?

Profit for facility 1 = MR1 = MC1 MR1 = d(TR)/dQ1 TR1 = (1200 -4(Q1+Q2))Q1 TR1 = 1200Q1 - 4Q12 -…

Answered: Suppose] A Cmpany is the sole provider…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities:

Q₁ kilowatts are produced at facility 1 and
Q₂ kilowatts are produced at facility 2;

where Q = Q₁ + Q₂.

The costs of producing electricity at each facility are given by

C₁(Q₁) = 8,000 + 6Q₁
C₂(Q₂) = 6,000 + 3Q₂+ 5Q₂²

Calculate the profit maximizing output levels of each factory?

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