how laser eye surgery is performed
how laser eye surgery is performed

Help with Monopoly Question please?
The Laser Eye Clinic (LEC) is the only provider of laser eye surgery in a medium-sized city. Its fixed costs are $2.5 million per year. Its variable (and marginal) cost of each surgery is $500. Demand for its surgeries can be written as P = 2,500 – 0.25Q, which means that MR = 2,500 – 0.50Q, where P is the price of the surgery, MR is marginal revenue, and Q is the number of surgeries performed each year.
From the previous problems, you know that for LEC to maximize its yearly profits, it will perform 4,000 surgeries each year and charge $1,500 for each surgery. How much profit does LEC earn each year?
My answer is 6,000,000
However, i am not sure can someone please explain this question for me.
thanks
$ 1500000
Use LEC’s profit-maximizing quantity of 4,000 surgeries, performed at $1,500 each, to calculate its annual profit:
LEC’s total revenue is Q x P = 4,000 x $1,500 = $6,000,000.
LEC’s total variable cost equals $500 x Q = 500 x 4,000 = $2,000,000.
The setup of the problem states that LEC’s fixed annual fixed costs are $2,500,000.
Thus, LEC earns an annual profit of $6,000,000 – $2,000,000 – $2,500,000 = $1,500,000.

















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