Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The film asks you how much to charge to maximize profits. The first two columns in Table 10.5 provide the
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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. Answer the following question accordingly. Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 Total fixed costs in the above table is: Select one: a. $130 b. $10 c. $100 d. Zeroarrow_forwardAndrea'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. Answer the following question accordingly. Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 The profit maximizing price in the above table is: Select one: a. $21 b. $24 c. $22 d. $25 ооооarrow_forwardAndrea'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, and marginal cost. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Your response must include, for each level of output .the total revenue, marginal revenue, average cost, and marginal cost. Then draw your conclusion about the level of output and total the firm will earn in profits? Table of prices = $25,$24,$23,$22.50,$22,$21.60,$21.20 Quantity= 0,10,20,30,40,50,60 TC= $130,$275,$435,$610,$800,$1,005,$1,225 Ty.arrow_forward
- IV. Slim City is a town resided by slim people, with no health club in town. LA Fatness has estimated that the annual demand for their Fatness Club in this town to be Q = 160 - P. Every Club member has a marginal cost of $40, and the annual fixed cost of the business is $500 (assume a linear cost function). 1. LA Fatness starts the first Fatness Club in town. What is the optimum price and membership quantity? 2. What is the profit of the business at the optimum solution? 3- Observing the potential for profit, Twenty-Eight-Hours Club (T-E-H Club), a competitor of the LA Fatness, enters the market. T-E-H Club has the same marginal and fixed cost structure as of the LA Fatness and provides a homogeneous service. is the optimum quantity for the T-E-H Club? 4- What will be the price in market after T-E-H Club enters the market? Styles Pane 5- Suppose LA Fatness and T-E-H Club continue non-cooperative profit-maximizing strategies in market. Find the reaction function of the LA Fatness and…arrow_forwardA physical therapy clinic faces a demand equation of Q 200-1.5P, where Q is sessions per month and P is the price per session. The clinic is currently charges $80. What is its sales volume and revenue at this price? -arrow_forwardAdvertising is often described as wasteful and useless for consumer. Focusing on what you learned about asymmetric information and price dispersion, is there an economic rationale for advertising? Are there characteristics of certain types of goods that would make advertising information regarding these goods particularly useful to consumer?arrow_forward
- Price Quantity Total Cost $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 Sharon'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 treatment is given by the first two columns in the table above. The total costs are provided in the third column. For each level of output, calculate total revenue, marginal revenue, average cost, and marginal cost. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits?arrow_forwardWhich drug type is expected to have a higher markup over cost? Brand name drugs Both have about the same markup Generic drugsarrow_forwardSuppose you work for Philippine Competition Commission and you find out that in province A, the only two available hospitals are planning to merge, which would result to a monopoly. If you do not allow for merging, hospital 2 will leave the market. Given the following cost functions and the information provided, would you allow for the merging of the two hospitals? Why or why not? Explain intuitively and mathematically. Hospital 1's cost function = 30 + q Hospital 2's cost function = 40 + 92 Joint cost function = 50+q+q2arrow_forward
- Tyke's Bikes is a bicycle sales and repair shop in a small city. It sells new and used bikes with a narrow profit margin and does repairs at minimal costs. Frequently, if a child comes into the sh with a broken part or a flat tire, Tyke's makes the repair for free if the child has no money. Tyke's also provides a free one-hour repair class for those who want to learn how to fix their bikes. At local organized bike rides, Tyke's provides free services, asking only for voluntary donations. W theory of corporate social responsibility is Tyke's exhibiting? O The narrow view, or invisible hand theory. The moderate view, or government's hand theory. The hybrid view, or citizen's hand theory. The broad view, or good corporate citizenship..arrow_forwardName-Brand Prescription Drugs Market—“Happy Pill”—that greatly improves life but is not essential to life. Using supply and demand analysis, explain what happens to the market price and quantity of a name-brand prescription drug Happy Pill if its patent expires. Using supply and demand analysis explain why Happy Pill might be advertised. Using supply and demand analysis, explain what would happen to the price and quantity of Happy Pills if there was a severe recession, and people lost their jobs, which included a health-care benefit that payed for prescription drugs.arrow_forwardConsider a hospital that faces a demand curve, P = 150-Q, and supply curve MC=Q. a. Derive the hospital’s choice of output level Q and price P when it is the only provider in the area (monopoly) B. Derive the hospital’s choice of output level Q and price P under perfect competition.arrow_forward
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning