Question
A recent graduate from medical school is the only Doctor in a large country town. She faces the following daily demand schedule for consultations Price/WTP
A recent graduate from medical school is the only Doctor in a large country town.
She faces the following daily demand schedule for consultations
Price/WTP ($)
Quantity
demanded per
day
100
0
90
1
80
2
70
3
60
4
50
5
40
6
30
7
20
8
10
9
0
10
The total fixed cost (TFC) for the Doctor to rent the premises is $100 per day, and
the marginal cost of seeing another patient is $4 times the number of units supplied
(MC = 4Q, where Q is the number of patients seen).
(a)
What is the profit maximizing uniform consultation fee for the Doctor to charge?
With uniform pricing, what is the profit maximising quantity of patients that she
should see each day?
What profits will the practice earn?
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