A podiatrist fits about 45 patients per week with new orthotic shoe inserts. She finds that by reducing the price of a follow-up visit from $30 to $20, the number of patients returning for a follow-up visit increases from 15 to 25. Further reducing the price from $20 to $5 increases the number of follow-up visits to 30.
A) Marginal revenue generated by the price reduction from $30 to $20 is -50.
B) Marginal revenue generated by the price reduction from $20 to $5 is 350.
C) In order to maximize profits, the best decision for this podiatrist is to reduce the price to $5, as this will result in the largest increase in demand.
D) In order to maximize profits, the best decision for this podiatrist is to reduce the price to $20, as this will result in the largest total revenue.
E) It is impossible to determine which price level would maximize profits for this podiatrist, as information about costs is not available.
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