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:

Indirect Method

A technique used in cash flow statement preparation where net income is adjusted for non-cash transactions to calculate operating cash flows.

Cash Dividends

Payments made by a corporation to its shareholder members from earnings, typically in the form of cash.

Net Income

The amount of money remaining after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from a company's total revenue.

Indirect Method

A financial reporting approach used primarily for cash flow statements that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.