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 price and quantity for the demand curve for treatments. The third column shows its total costs. 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?
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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 first two columns in the table below provide the price and quantity for the demand curve for treatments. The fifth column shows its total costs. Complete the table. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost $25 0 $0 N/A $130 N/A $24 10 $275 $23 20 $435 $22.50 30 $610 $22 40 $800 $21.60 50 $1005 $21.20 60 $1225arrow_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 Total revenue of producing 30 units of output from the above table is: Select one: a. $180 b. $435 c. $600 d. $660arrow_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 In order to maximize profit, the above firm should produce where: Select one: a. Marginal Revenue = Marginal Cost b. Price= Average Total Cost C. Price = Marginal Cost d. Economic profit= zeroarrow_forward
- 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, and marginal cost. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Price $25.00 0 $24.00 $23.00 Quantity TC $21.60 10 $22.50 30 $21.20 20 $22.00 40 50 60 $130 $275 $435 $610 $800 $1,005 $1,225 Total revenue Marginal revenue Average cost Marginal costarrow_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_forwardCareRight Medical Company has invented and received a patent for a new drug to treat a rare and fatal disease. It charges $5,000 for a year’s supply of the drug. Critics claim that this amount is excessive, as it does not cost that much to produce. They believe the company is taking advantage of sick people. CareRight responds that they are losing money on this drug. The critics are right: It does not cost CareRight $5,000 to produce a year’s supply for one person. However, CareRight’s statement is also correct in that they are losing money on the drug. How can both statements be true? Consider the different types of costs in your answer.arrow_forward
- 19. Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The first two columns in Table 10.5 provide the price and quantity for the demand curve for treatments. The third column shows its total costs. 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? Price Quantity TC $25.00 $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 Table 10.5arrow_forwardIV. 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_forwardYour task is to show what the profit of this firm might look like using a key economics diagram. To make graphing easier, we will consider the price of the Ozempic drug for the middle-income country Bangladesh, which is $38 (assumed the profit-maximising price). For this task, you will be required to illustrate and explain to a typical first-year undergrad student who has no economics background the profit the firm makes at $38 per month, and what has happened to profit (producer surplus), markup, consumer surplus and the output if the price was reduced from $38 to $10 per month.arrow_forward
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