profit maximization price combination A state owned company is providing electricity at the price of

profit maximization price combination

A state owned company is providing electricity at the price
of $0105and faces the demand for electricity P=1255-0001Q The company has a
cost function C(Q)=100625+0105Q The state sells the firm, now the firm’s
only goal is profit maximization

a What is the number of kilowatt hours of electricity
produced and what is the price that the company will charge?

b Compute the price elasticity at the profit maximizing
price combination

c How much more profit will this firm make as a result of
privatization