Cost Fucntions

Number of Annual Annual Av consultation Fixed Variable Total Av Total Variable Marginal Total Marginal per year Cost Cost cost Cost Cost Cost Revenue Revenue Prot 0 100000 0 2000 100000 160000 2500 100000 170000 3000 100000 185000 3500 100000 206000 4000 100000 255000 4500 100000 310000 5000 100000 370000 Cost Functions Dr Li has been operating a general practice clinic since 2010. Dr Li employs a practice nurse and a receptionist. 1) In the table below complete the total cost, average total cost, average variable cost, and marginal cost columns. 2) Plot the average total cost, average variable cost, and marginal costs on a graph to show the cost functions. 3) What is the optimal level that will be produced by Dr Li assuming a competitive market? 4) What types of costs are included in the fixed costs of $100,000pa? 5) If the variable costs shown here include only the costs of the nurse and the receptionist, what other information do we need to determine if Dr Li's practice is economically viable? The price Dr Li receives per consultation is $100. 6) Now complete the total revenue, marginal revenue and profit columns. 7) Based on this information how many consultations does Dr Li produce in one year to maximise profit? Is this consistent with the level of production chosen based on the cost functions? Explain. 8) If this was your practice, would you continue to operate or look to sell? Explain