Question

XYZ Clinic offers a dentistry treatment.
You are the manager, the owner asks you how much to charge to maximize profits.
The demand curve for the treatments and their total costs are given in table 1.
a. For each level of output, calculate total revenue, marginal revenue, average cost, and marginal cost.
b. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits?
Table 1
Quantity        Price   Total Revenue   Marginal Revenue        Total Cost      Marginal Cost   Average Cost    
0       575         8500.00     
20      500         10000.00            
30      450         12000.00            
40      400         14500.00            
50      350         17500.00            
60      300         21000.00            
70      250         25500.00            
80      200         32000.00

Answer 1

Quantity	Price	Total Revenue	Marginal Revenue	Total Cost	Marginal Cost	Average Cost	Profit
0	575	0		8500			-8500
20	500	10000	500	10000	75	500.00	0
30	450	13500	350	12000	200	400.00	1500
40	400	16000	250	14500	250	362.50	1500
50	350	17500	150	17500	300	350.00	0
60	300	18000	50	21000	350	350.00	-3000
70	250	17500	-50	25500	450	364.29	-8000
80	200	16000	-150	32000	650	400.00	-16000

a. Total Revenue (Quantity*Price), Marginal Revenue (Change in total revenue/change in quantity), and Marginal Cost (Change in total cost/Change in Quantity), Average cost (Total cost/Quantity) are shown in the table above

b. Profit gets maximised where MC=MR and it is at quantity 40 and profit is $ 1500