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

question 82

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:

Accounts Receivable

Customer debts to a company for the provision of services or delivery of goods not yet paid for.

Accounting Cycle

A series of steps taken in order to prepare financial statements, starting from transactions and ending with closing the books.

Post-closing Trial Balance

A financial statement that lists all accounts and their balances after closing entries have been made, usually the final step in the accounting cycle.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries from the end of the previous period.