You are the manager of a firm that produces furniture. All your clients are in Kumasi (K) and Accra (A).Suppose the monthly inverse demand function for your furniture in in Accra and Kumasi combined is P= 1200 - 4Q. Because of prohibitive cost of transporting furniture between Accra and Kumasi, you setup two plants, one in each town. The cost of producing furniture at each facility is given by CA (QA ) =8000 + 6QA² and Ck(@k) = 8000 + 6Qk² where Q = Qa + Qk and Qa and Qk are the quantity of furnitureproduced at Accra and Kumasi respectively. Determine the profit maximizing amounts of electricity toproduce in the two facilities, the optimal price and the profit.

It is a profit maximization problem with 2 plants at different locations. Profit will be maximized…

Answered: You are the manager of a firm that…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An electric power plant uses solid waste for fuel in the production of electricity. The cost Y in dollars per hour to produce electricity is Y = 8 + 0.8X + 0.16 X^2, where X is in megawatts. Revenue in dollars per hour from the sale of electricity is 16X - 0.3X^2. Find the value of X that gives maximum profit.
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