Question

You may need to use the appropriate appendix table or technology to answer this question. Studies show that massage therapy has a variety of health benefits and it is not too expensive.t A sample of 17 typical one-hour massage therapy sessions showed an average charge of $58. The population standard deviation for a one-hour session is ơ-$5.5 (a) What assumptions about the population should we be willing to make if a margin of error is desired? We should be willing to make the assumption that the population is at least approximately skewed right.

Answer 1

To maximize profits for Andrea's Day Spa's aromatherapy treatment, one should calculate total revenue, marginal revenue, average cost, and marginal cost at each level of output, and find the output level where marginal revenue equals marginal cost.

Step-by-step explanation:

To determine the optimal charge for a relaxing aromatherapy treatment to maximize profits at Andrea's Day Spa, we must consider concepts from microeconomics. We need to calculate the total revenue, marginal revenue, average cost, and marginal cost at each level of output, using the given price and quantity from Table 10.5 and the total costs information. The profit-maximizing level of output is where marginal revenue equals marginal cost (MR=MC). We then calculate profits by subtracting total costs from total revenue at this output level. Without the specific data from Table 10.5, we cannot provide the exact numerical answer but can guide the student through the process.