Quiz Page 3 of 6 Next Page Note: It is recommended that you save your response a
ID: 374458 • Letter: Q
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Quiz Page 3 of 6 Next Page Note: It is recommended that you save your response as you complete each question Question 3 (1 point) At the consulting agency, water/wastewater customers fall under two categories: commercial and residential customers The commercial customers have a demand curve of d1-4250·90p1 while residential customers have a demand cure of d2 9,400 . 85p2 The water/wastewater operation cost is c = $3 per unit or gallon. If the consulting agency were to recommend charging a single price over both segments, what should it he? What is the total profi? $40.50 single price with $265,781 total profit $33.86 single price with $188,753 total profit $25 28 single price with-$93,000 total profit $82.86 single price with S445354 total profit Save Page 3 of 6 Next Page Save All Responses Go to Submit QuizExplanation / Answer
Profit P1(Commercial customers)= R1-C1 where R1 is Revenue of Commercial customers, C1 is cost
Profit P2(Residential customers)= R2-C2 where R2 is Revenue of Residential customers, C2 is cost
R1 = D1*p1 where D1 is demand and p1 is price for commercial customers
R1 = 4250p1-90p12
C1 = c*p1 = 12750-270p1
R2 = D2*p2 where D2 is demand and p2 is price for residential customers
C2 = c*p2 = 28200-255p2
R2 = 9400p2-85p22
Maximizing total profit when p1=p2=p
R1-C1+R2-C2 = 4250p-90p2-12750+270p+9400p-85p2-28200+255p
To find max profit, differential of the equation = 0
14175-350p=0 => p=40.5 $(single price)
Substituting p=40.5 in the above profit equation we get,
Profit = 265781 $
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