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Dr. Leona Williams, a well-known plastic surgeon, has a reputation for being one of the best surgeons for reconstructive nose surgery. Dr. Williams enjoys a
Dr. Leona Williams, a well-known plastic surgeon, has a reputation for being one of the best surgeons for reconstructive nose surgery. Dr. Williams enjoys a rather substantial degree of market power in this market. She has estimated demand for her work to be: Q=480-0.2P where Q is the number of nose operations performed monthly and P is the price of a nose operation.
- What is the inverse demand function for Dr. Williams' services?
- What is the marginal revenue function? The average variable cost function for reconstructive nose surgery is estimated to be: AVC=2Q2-15Q+400 where AVC is the average variable cost (measured in dollars), and Q is the number of operations per month. The doctor's fixed cost per month is $8,000.
- If the doctor wishes to maximize her profit, how many nose operations should she perform each month?
- What price should Dr. Williams charge to perform a nose operation?
- How much profit does she earn each month?
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