Derivation of marginal revenue function and inverse demand

Assignment Help Macroeconomics

Reference no: EM1311098

Dr Leona Williams a well know 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. William's service?
What is marginal revenue function?

The average variable cost function for reconstructive surgery is estimated to be:

AVC = 2Q - 15Q + 400

Where AVC is average variable cost (measured in dollars), and Q is the number of operations per month. The Doctor's fixed costs each month are $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?

Reference no: EM1311098

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