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The monthly demand equation for an electric utility company is estimated to be p = 72 - (10 ) x, where p is measured in
The monthly demand equation for an electric utility company is estimated to be p = 72 - (10 ) x, where p is measured in dollars and x is measured in thousands of killowatt-hours. The utility has fixed costs of $9,000,000 per month and variable costs of $32 per 1000 kilowatt-hours of electricity generated, so the cost function is C(x) = 9 . 10 + 32x, (a) Find the value of x and the corresponding price for 1000 kilowatt-hours that maximize the utility's profit. (b) Suppose that the rising fuel costs increase the utility's variable costs from $32 to $40, so its new cost function is C, (x)=9 . 10" + 40x. Should the utility pass all this increase of $8 per thousand kilowatt-hours on to the consumers? (a) Find the value of x and the corresponding price for 1000 kilowatt-hours that maximize the utility's profit. (Type an integer or a decimal.)
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