Posted by **Mo** on Thursday, September 6, 2007 at 6:00pm.

Dr. Jeraisy, a well-known plastic surgeon, has a reputation for being one of the best surgeons for reconstructive nose surgery. Dr. Jeraisy 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 the price of a nose operation.

1-What is the inverse demand function for Dr. Jeraisy’s services?

2-What is the marginal revenue function?

The average variable cost function for reconstructive nose surgery is estimated to be: AVC = 2Q2 – 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 US$8000

3-If the doctor wishes to maximize her profit, how many nose operations should she perform each month?

4-What price should Dr. Jeraisy charge to perform a nose operation?

5-How much profit does she earn each month?

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