VWX.Clinic offers a dentistry
|
VWX.Clinic offers a dentistry treatment. You are the manager, the owner asks you how much to charge tomaximize profits. The demand curve for the treatments and their total costs aregiven in table 1. a. For each level of output, calculate total revenue, marginalrevenue, average cost, and marginal cost. b. What is the profit-maximizing level of output for thetreatments and how much will the firm earn in profits? |
Table 1
| Quantity | Price | Total Revenue | Marginal Revenue | Total Cost | Marginal Cost | Average Cost |
| 0 | 431250 | 6375000 | ||||
| 20 | 375000 | 7500000 | ||||
| 30 | 337500 | 9000000 | ||||
| 40 | 300000 | 10875000 | ||||
| 50 | 262500 | 13125000 | ||||
| 60 | 225000 | 15750000 | ||||
| 70 | 187500 | 19125000 | ||||
| 80 | 150000 | 24000000 |
Answer:
|
Quantity |
Price |
Total Revenue |
Marginal Revenue |
Total Cost |
Marginal Cost |
Average Cost |
Profit |
|
0 |
431250 |
0 |
6375000 |
-6375000 |
|||
|
20 |
375000 |
7500000 |
375000 |
7500000 |
56250 |
375000.00 |
0 |
|
30 |
337500 |
10125000 |
262500 |
9000000 |
150000 |
300000.00 |
1125000 |
|
40 |
300000 |
12000000 |
187500 |
10875000 |
187500 |
271875.00 |
1125000 |
|
50 |
262500 |
13125000 |
112500 |
13125000 |
225000 |
262500.00 |
0 |
|
60 |
225000 |
13500000 |
37500 |
15750000 |
262500 |
262500.00 |
-2250000 |
|
70 |
187500 |
13125000 |
-37500 |
19125000 |
337500 |
273214.29 |
-6000000 |
|
80 |
150000 |
12000000 |
-112500 |
24000000 |
487500 |
300000.00 |
-12000000 |
a. Total Revenue (Quantity*Price),Marginal Revenue (Change in total revenue/change in quantity), andMarginal Cost (Change in total cost/Change in Quantity), Averagecost (Total cost/Quantity) are shown in the table above
b. Profit gets maximised where MC=MRand it is at quantity 40 and profit is $ 11,25,000
"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"
