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Solve clearly A utility company is a natural monopoly with the following information where P represents the annual price and Q represents quantityi P m
Solve clearly
A utility company is a natural monopoly with the following information where P represents the annual price and Q represents quantityi P m 800 0.00090Q (Demand) TR = 800Q 0.00090Q02 MR = 800 0.0018Q TC = 3,750,000 4 100Q + 0.00005Q02 MC = 100 + 0.0001Q Assume that the value of the utility company's invested assets is $800,000,000. a. Calculate the prot maximizing value for P and Q. What is the monthly charge to consumers (or p/12)? What is the value for prots and what is the value for the Return on investment? b. Suppose the rate commission n decides that the maximum rate allowed for the Return on investment is 20%. What will he new P and Q be for. this utility and what will profits be? What is the new monthly charge under this regulation? Supply: QS = 2? 10 or P = 0.5QS + 5Step by Step Solution
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