Answer to Question #171484 in Microeconomics for asare Emmanuel

Question

Asilekpe Company Limited is considering constructing a borehole in the village of Adukofe. The 

construction would cost Gh₵2 million and there will be no cost of maintenance. The following

table shows the company’s anticipated demand over the lifetime of the bridge:

Price per gallon (Gh₵) Number of Gallons (‘000)

8 0

7 100

6 200

5 300

4 400

3 500

2 600

1 700

0 800

a. If the company were to construct the borehole what would be its profit-maximizing 

price? Would that be the efficient level of output? Explain your answer

Answer 1

(a) $4*400000=1600000$

$Gh₵ 1,600,000$ million

(b)No. The company is making a loss of four hundred thousand

$=2000000-1600000=400000$