The owner of an optometry practice has the following demand

The owner of an optometry practice has the following demand and cost schedules for eye exams:

Solution

a.

Total Revenue per week = Price per eye exam*Eye exams per week

Marginal revenue = (current revenue - just Preceding revenue)/(Current eye exam per week – just preceding eye exam per week)

Marginal cost = (current total cost - just Preceding total cost)/(Current eye exam per week – just preceding eye exam per week)

b.

Net profit = Total revenue - total cost

Here, net profit is maximum ($700) when 200 eye exams per week is done at a price of $60 per eye exam.

c.

net profit will be $700 at this optimum level.

Price Per Eye Exam ($)	Eye exams per week	Total cost per week ($)	Total Revenue Per week	Marginal Revenue	Marginal Cost
100	100	10500	10000
80	140	10800	11200	30	7.5
60	200	11300	12000	13.33	8.33
40	310	11900	12400	3.64	5.45
20	550	12600	11000	-5.83	2.92