Urban water supply has the Average Cost function AC =150/Q, and demand function Q = 18-4P; Q is quantity of water output, and P is unit price of water. (i) Obtain the Total Cost and Total Revenue Functions of water utility. (ii) Find the optimal output (Q*) of water utility. (iii) Find the optimal price (P*) of water utility.
Urban water supply has the Average Cost function AC =150/Q, and demand function Q = 18-4P; Q is quantity of water output, and P is unit price of water. (i) Obtain the Total Cost and Total Revenue Functions of water utility. (ii) Find the optimal output (Q*) of water utility. (iii) Find the optimal price (P*) of water utility.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Urban water supply has the Average Cost function AC =150/Q, and demand function
Q = 18-4P; Q is quantity of water output, and P is unit
(i) Obtain the Total Cost and Total Revenue Functions of water utility.
(ii) Find the optimal output (Q*) of water utility.
(iii) Find the optimal price (P*) of water utility.
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