2. Profit maximization of a seller in a competitive price-searchermarketConsider Unico Doughnut, a doughnut shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue(MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Assume that the shop is operating in the short run.Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the greenrectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) toshade in the area representing its loss.PRICE (Dollars per doughnut)4.003.503.002.502.001.501.000MC005ATCDemand10 15 20 2.5 3.0 3.5 40QUANTITY (Thousands of doughnuts)MRAt the profit-maximizing output and price, the shop's profit is equal to 3Given the profit-maximizing choice of output and price, there areProft Maximizing OutcomeProfitLoss.(Hint: Be sure to enter a minus sign if profit is negative.)shops in the industry than there would be in long-run equilibrium.

Here we have to findout the profit/Loss of a firm in perfectly competitive industry.A firm in…

Answered: 2. Profit maximization of a seller in a…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Monopoly

Section8.4: Comparing Monopoly And Perfect Competition

Problem 1YTE

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Suppose Jake runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Jake's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Jake produces. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 50 25 -25 1 2 6 8 QUANTITY (Frying pans) Calculate Jake's marginal revenue and marginal cost for the first seven frying pans he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. (? 40 35 Marginal Revenue 30 25 Marginal Cost 20 15 1 2 3 4 5 6. QUANTITY (Frying pans) Jake's profit is maximized when he produces frying pans. When he does this, the marginal cost of the last frying pan he…
Suppose Rosa runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $20 per teddy bear. The following graph shows Rosa's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven teddy bears that Rosa produces, including zero teddy bears. 200 175 Total Revenue 150 125 Total Cost Profit 100 75 50 25 -25 1 3 4. 8 QUANTITY (Teddy bears) TOTAL COST AND REVENUE (Dollars)
3. Profit maximization using total cost and total revenue curves Suppose Ana runs a small business that manufactures shirts. Assume that the market for shirts is a perfectly competitive market, and the market price is $20 per shirt. The following graph shows Ana's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Ana produces, including zero shirts. TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars) Total Revenue A 125 100 Total Cost ☐ Profit 200 175 150 75 50 ༔་ཎྜ་ ྴ་སྐྱ ིི་ཐྭ་8་མ་° 1 2 3 4 5 6 7 8 QUANTITY OF OUTPUT (Shirts) (?) Calculate Ana's marginal revenue and marginal cost for the first seven shirts she produces and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. Note: Be sure to plot marginal values between the appropriate whole unit values. For instance, plot…
3. Profit maximization using total cost and total revenue curves Suppose Latasha runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $20 per teddy bear. The following graph shows Latasha's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Latasha produces.
Suppose Hubert runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Hubert's total cost curve. Use the blue points (circle symbol) to plot total revenue, and the green points (triangle symbol) to plot profit for the first seven shirts that Hubert produces, including zero shirts. TOTAL COST AND REVENUE (Dollars) 125 100 75 50 25 -25 -50 0 0 1 2 ☐ ■ U 3 4 5 QUANTITY (Shirts) L 6 Total Cost 7 8 Total Revenue Profit ? Calculate Hubert's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost.
Calculate Darnell's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. COSTS AND REVENUE (Dollars per shirt) 40 35 30 25 20 15 10 5 0 0 1 2 3 5 QUANTITY (Shirts) 4 6 7 8 O Marginal Revenue Marginal Cost ? Darnell's profit is maximized when he produces shirts. When he does this, the marginal cost of the last shirt he produces is $ , which is than the price Darnell receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize his profit) is $ , which is than the price Darnell receives for each shirt he sells. Therefore, Darnell's profit- maximizing quantity corresponds to the intersection of the curves. Because Darnell is a price taker, this last condition can also be written as
The total revenue of a fimm decreased after an increase of the price of the goods it sells. Explain why this can happen. Include a graph in your explanation. Indicate price effect and output effect in your graph.
3. Profit maximization using total cost and total revenue curves Suppose Kenji runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a price-taker market, and the market price is $10 per teddy bear. The following graph shows Kenji's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven teddy bears that Kenji produces, including zero teddy bears. 125 Total Cost 100 Total Revenue 75 Profit 50 25 -25 -50 1 2 4 6 7 QUANTITY (Teddy bears) Calculate Kenji's marginal revenue and marginal cost for the first seven teddy bears he produces and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. 30 TOTAL COST AND REVENUE (Dollars)
3. Profit versus total revenue A firm has total revenue (TR) and total cost (TC) curves as shown on the following diagram. To complete the graph, you will have to illustrate two distances with line segments. Determine the quantity of output that generates the maximum profit. Use the green points (triangle symbol) to indicate the amount of profit at this quantity of output. Then, determine the quantity of output that generates the maximum total revenue. Use the purple points (diamond symbol) to indicate the amount of revenue at this quantity of output. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Cost Total Revenue, Total 20 18 16 14 10 6 4 2 0 C 0 1 O 0 C 2 ☐ O 0 O ■ 0 C TC 5 6 8 3 4 7 Quantity of Output (Output per day) The maximum profit this firm can earn is TR 9 10 " Maximum Revenue Maximum Profit (?) while the maximum total revenue it can earn is
Suppose Becky runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Becky's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Becky produces, including zero shirts. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 -25 2. 3 4 6. 8. QUANTITY (Shirts) 50 25 TOTAL COST AND REVENUE (Dollars)
Suppose Ginny runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Ginny's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven (inclusive) that Ginny produces. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 50 -25 2 QUANTITY (Shirts) TOTAL COST AND REVENUE (Dollars)
3. Profit maximization using total cost and total revenue curves Suppose Musashi runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Musashi's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven frying pans that Musashi produces, including zero frying pans. COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 ■ 0 40 35 30 25 20 15 10 5 0 D 0 1 n 2 Calculate Musashi's marginal revenue and marginal cost for the first seven frying pans he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. 1 G 0 7 3 4 4 5 QUANTITY (Frying pans) 2 000 000 6 7 8 Total Cost 0 3 4 5 QUANTITY (Frying pans) Musashi's profit is maximized when…

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