Question

# Your hospital has a demand function given by P = 404 - 2Q where P is...

Your hospital has a demand function given by P = 404 - 2Q where P is the price of hospital care and Q is the quantity of hospital care. The marginal revenue (MR) function is given by MR = 404 – 4Q. The total cost function (TC) is given by TC = 300 + 4Q + 8Q2 and the marginal cost (MC) is given by MC = 4 + 16Q.

1. Find the total revenue (TR) function which is a function of quantity (Q) and show your work.

1. Fill in the blanks, A, B, C and D and show your work to find your answers.
 P Q TR TC AC MC Profit 404 0 0 300 -300 394 5 1970 520 104 44 1450 10 C 374 A D 364 20 B 3580 179 284 354 25 8850 5400 216 E 344 30 10320 7620 254
1. Find the output that maximizes total revenue and show your work
1. Find the output that maximizes profit and show your work
1. Consider the four new management tools that have been introduced during the past four decades: benchmarking, total quality management, reengineering and the learning organization. Which tool includes Six Sigma aims to improve the process performance and achieve high levels of quality by investigating and eliminating causes of defects and minimizing process and product variability.

A.

P = 404-2Q --------- (1)

Multiply above equation by Q

P*Q = 404Q - 2Q^2

Or

TR = 404Q - 2Q^2

B.

 P Q TR TC AC MC Profit 404 0 0 300 -300 394 5 1970 520 104 44 1450 384 10 3840 1140 114 124 2700 374 15 5610 2160 144 204 3450 364 20 7280 3580 179 284 3700 354 25 8850 5400 216 364 3450 344 30 10320 7620 254 444 2700

C.

Revenue is maximized, when output = 30

At this level, TR = 10320

D.

Profit is maximized, when output = 20

At this level, profit = 3700 that is maximum among all the output level.

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