Answer to Question #191642 in Accounting for mahlet

Question

Suppose Ethiopian Electric Light and Power Corporation (EELPC) is a multi plant
monopolist having two plants, Tekeze plant (plant1) and Fincha plant (Plant2). The
operating costs of the two plants are given as follows:
Tekeze Plant: TC1 = 10 Q1
2 and where Q1 - Amount of electric power produced in
Tekeze
Fincha plant: TC2 = 20 Q2
2 Q2 – amount of electric power produced in Fincha
EELPC estimates the demand for electric power by the following function
P= 700 – 5Q where P - is price (total in million birr) per Giga watt and
Q – is the total amount of Giga watt sold and Q = Q1 + Q2
Note that a Giga watt of electric power, whether it comes from Fincha or Tekeze plant worth
equal price
a) What level of output (electric power) should EELPC produce and what price per Kilowatt
should it charge to maximize its profit?
b) How much of the total output should be produced in each plant?

Answer 1

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