Determine what is the optimal size of the reservoir

Reference no: EM13296809

You have been asked to estimate the optimal size of a small reservoir that is being constructed near Atlanta. Knowing that water is a scarce commodity, you have decided to adopt an "economists" perspective on this problem, that is, you have decided to determine the size of the reservoir where net benefits are maximized and where marginal benefits equal marginal costs.
Define "x" as the size of the reservoir in (acre-ft)/year. The total benefits and total costs of this reservoir can be estimated with the following equations:
TB= (2*x) + (250*x^2) TC= (55*x) + (0.8* x^3)
What is the optimal size of the reservoir?

Reference no: EM13296809

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