An Electric Utility Is Going to Use a Block-Pricing Schedule

question 36

Essay

An electric utility is going to use a block-pricing schedule.They plan to charge P₁ for the first Q₁ units and P₂ for the subsequent units.The units sold at P₂ are the total units sold,Q₂,minus the total units sold at P₁.The inverse demand curve is P = $100 - Q,and the marginal and average cost is $40.Use calculus to solve for P₁,P₂,Q₁,Q₂.

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Definitions:

Parent

A company which has control over another company or companies, typically through ownership of a majority of shares.

Senior Entity

A senior entity is a leading or controlling organization in a relationship, often referring to a parent company in a group of companies or the main party in partnerships.

Net Income

Net income is the profit a company has left over after all its expenses, taxes, and costs have been subtracted from total revenue.

Net Sales

The remaining revenue from sales after removing expenses related to returns, provisions for defective or unaccounted-for goods, and concessions.