You are a hospital who provides a medical service.
You face the following demand: Q=100-P or equivalently P=100-Q.
Your total costs are given by: TC(Q)=10+2Q.
In an Excel file:
1. Create a first column labelled "TQ" which represents Total Quantities (Q). Replace the cells with quantities 1 to 100.
2. In the second column, provide the price the hospital must charge to exactly sell each quantity from the first column (i.e., for quantities 1 through 100). Label this column, "Price".
3. Create a third column where you provide total revenue associated with each quantity. Label this column "TR".
4. Create a fourth column where you provide the marginal revenue for each quantity. Label this column "MR".
5. Create a fifth column where you provide the total cost for each quantity. Label this column "TC".
6. Create a sixth column where you provide the marginal cost for each quantity. Label this column "MC".
7. What is the golden rule for profit maximization? Provide some intuition. What quantity satisfies this condition? (assume that quantities are indivisible).
8. Create a seventh column where you provide the profit associated with each quantity. Label this column as "Profit".
9. What is the profit maximizing quantity? Is this the same answer you got in 7.? (again assume that quantities are indivisible).
