Question

(30 points) Assume a for-profit hospital is a monopolist with a demand function given by P-404-2r, where p is price of hospital care and x is the quantity of hospital care. The hospital's total cost is given by the cost function C 300+4r+48r, where C is total cost. Compute: (a) (5 points) marginal cost (b) (5 points) average cost c) (5 points) hospital's profit maximizing output (d) (5 points) price (e) (5 points) revenue, and (f) (5 points) profit

Please solve e and f

Answer 1

e. Total Revenue is = Price * Quantity

or, Total revenue = x* (404 - 2x)

or Total Revenue = 404x - 2x²

f. Profit =  Total revenue - Total Cost

or, Profit = (404x - 2x²) - (300 + 4x + 48x)

or, Profit = 352x - 2x² - 300

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