Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. For each level of output, calculate total revenue, marginal revenue, average cost, marginal cost, and profits. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Price Quantity TC MC AC TR MR Profit $25.00 0 $130 --- --- $24.00 10 $275 $23.00 20 $435 $22.50 30 $610 $22.00 40 $800 $21.60 50 $1,005 $21.20 60 $1,225
Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. For each level of output, calculate total revenue, marginal revenue, average cost, marginal cost, and profits. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Price Quantity TC MC AC TR MR Profit $25.00 0 $130 --- --- $24.00 10 $275 $23.00 20 $435 $22.50 30 $610 $22.00 40 $800 $21.60 50 $1,005 $21.20 60 $1,225
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. For each level of output, calculate total revenue, marginal revenue, average cost, marginal cost, and profits. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits?
|
Price |
Quantity |
TC |
MC |
AC |
TR |
MR |
Profit |
|
$25.00 |
0 |
$130 |
--- |
--- |
|
|
|
|
$24.00 |
10 |
$275 |
|
|
|
|
|
|
$23.00 |
20 |
$435 |
|
|
|
|
|
|
$22.50 |
30 |
$610 |
|
|
|
|
|
|
$22.00 |
40 |
$800 |
|
|
|
|
|
|
$21.60 |
50 |
$1,005 |
|
|
|
|
|
|
$21.20 |
60 |
$1,225 |
|
|
|
|
|
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