Restaurant Marketing Services, Inc. offers affinity card marketing and monitoring systems to fine dining establishments nationwide. Fixed costs are $600,000 per year. Sponsoring restaurants are paid $60 for each card sold, and card printing and distribution costs are $3 per card. This means that RMS's marginal costs are $63 per card. Based on recent sales experience, the estimated demand curve and marginal revenue relations for are:
P = $130 - $0.000125Q and TC = 600,000 + 63Q
A. Calculate output, price, total revenue, and total profit at the revenue-maximizing activity level.
B. Calculate output, price, total revenue, and total profit at the profit-maximizing activity level.