the table shows case mix adjusted price and volume data the table shows case mix

Question

the table shows case mix adjusted price and volume data the table shows case mix adjusted price and volume data the table shows case mix adjusted price and volume data overhead is $2,000. 1OT long a therapeutic massage takes). Supplies per massage ow You currently charge $75 cost S per massage and have a volume of 100 er month. Your trade journal says that a 5 percent reduch in prices typically results in a 7.5 percent increase in volume. What would happen to your volume, revenues, and profits if you cut your 12.9 The table shows case-mix-adjusted price and volume data for Duncs Hospital. Calculate its marginal cost, marginal revenue, and profits price to $70? If you raised your price to $80? at each level of output. What price should it choose? Admissions 6,552 9,048 Revenue $52,416,000$70,574,400 $73,507,200 $73,881,600 $74,131,200 9,672 9.984 10,296 Cost $42,588,000 $59,264,400 $63,835,200 $66,393,600 $68,983,200 Price $8,000 $7,800 $7,600 $7,400 $7,200 12.10 Your firm spent $100 million developing a new drug, It has now been approved for sale, and each pill costs S1 to manufacture. Your market rescarch suggests that the price elasticity of demand in t general public is-

Explanation / Answer

Solution 12.9:

Profit is highest at output level of 9048 units with selling price $7,800 per unit. Therefore $7,800 selling price will be selected.

Computatation of Marginal Revenue, Marginal cost and profit at each level of output - Dunes Hospital Particulars $6,552.00 Marginal $9,048.00 Marginal $9,672.00 Marginal $9,984.00 Marginal $10,296.00 Revenue $52,416,000.00 $18,158,400.00 $70,574,400.00 $2,932,800.00 $73,507,200.00 $374,400.00 $73,881,600.00 $249,600.00 $74,131,200.00 Cost $42,588,000.00 $16,676,400.00 $59,264,400.00 $4,570,800.00 $63,835,200.00 $2,558,400.00 $66,393,600.00 $2,589,600.00 $68,983,200.00 Profit $9,828,000.00 $1,482,000.00 $11,310,000.00 -$1,638,000.00 $9,672,000.00 -$2,184,000.00 $7,488,000.00 -$2,340,000.00 $5,148,000.00

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