Describe the profit-maximizing amounts of electricity

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Reference no: EM1361437

The second largest public utility in the nation is the sole provider of electricity in 32 counties of southern Florida. To meet monthly demand for electricity in these counties, which is represented by the inverse demand function, P = 1000 - 5 Q, the utility company has set up two electric generating facilities: Q 1 is produced at facility 1 and Q 2 is produced at facility 2 (so Q = Q 1 + Q 2 & P = 1000 - 5( Q 1 + Q 2 )). The costs of producing at the two facilities are C 1 (Q 1 ) = 10,050 + 5 Q 1 2 (M C 1 = 10Q 1) and C 2 (Q 2 ) = 5,000 + 2 Q 2 2 (MC2 = 4 Q 2 ), respectively. Determine the profit-maximizing amounts of electricity to produce at the two facilities, the optimal price, and the utility company's profits. (Hint: MR1 = 1000 - 10Q1 - 5 Q2 & MR2 = 1000 - 10Q2 - 5 Q1 ).

Reference no: EM1361437

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