A Utility Company Faces Demand Given by Q = 40

question 119

Multiple Choice

A utility company faces demand given by q = 40 - 0.1p, where p is the price per unit.
If the company adopts a two-tier pricing structure, the price per unit for the higher price that maximizes revenue is $____.

• A) 266.67
• B) 233.33
• C) 166.67
• D) 133.33

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Definitions:

Revenue Recognition

Accounting principle determining when revenue should be recorded in the financial statements, typically at the time goods or services are provided.

Book Value

The net value of a company's assets found on its balance sheet, calculated as total assets minus intangible assets and liabilities.

Carrying Amount

The value at which an asset or liability is recorded on the balance sheet, including depreciation or amortization.

Reasonable Degree

A reasonable degree refers to an acceptable level of certainty or accuracy, often used to describe the precision expected in estimates or judgments.