3. Profit maximization using total cost and total revenue curvesSuppose Ana runs a small business that manufactures shirts. Assume that the market for shirts is a perfectly competitive market, and the marketprice 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 Anaproduces, including zero shirts.TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars)Total RevenueA125100Total Cost☐Profit2001751507550༔་ཎྜ་ ྴ་སྐྱ ིི་ཐྭ་8་མ་°12 34 5678QUANTITY 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 values at 0.5, 1.5, and so on.403530Marginal Revenue(? PRICEAND COST (Dollars per shirt)5TOTAL REVEN012 358QUANTITY 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 values at 0.5, 1.5, and so on.30can also be written as12 3 4 578QUANTITY OF OUTPUT (Shirts)Marginal RevenueMarginal Cost(?Ana's profit is maximized when she producesiswhichshirts. When she does this, the marginal cost of the last shirt she produces is $than the price Ana receives for each shirt she sells. The marginal cost of producing an additional shirt (that is, one more shirt thanwould maximize her profit) is Sthan the price Ana receives for each shirt she sells. Therefore, Ana's profit-maximizingwhich isquantity corresponds to the intersection of thecurves. Because Ana is a price taker, this last condition

Ana runs a business of shirts. The market for shirts is perfectly competitive.The market price for…

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 values at 0.5, 1.5, and so on. 40 35 PRICE AND COST (Dollars per shirt) 10 15 20 25 g 30 5 0 1 2 3 4 5 6 7 QUANTITY OF OUTPUT (Shirts) Marginal Revenue Marginal Cost ? Ana's profit is maximized when she produces is shirts. When she does this, the marginal cost of the last shirt she produces is S which than the price Ana receives for each shirt she sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize her profit) is S which is than the price Ana receives for each shirt she sells. Therefore, Ana's profit-maximizing quantity corresponds to the intersection of the ▼curves. Because Ana is a price taker, this last condition can also be written as .

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 values at 0.5, 1.5, and so on. 40 35 PRICE AND COST (Dollars per shirt) 10 15 20 25 g 30 5 0 1 2 3 4 5 6 7 QUANTITY OF OUTPUT (Shirts) Marginal Revenue Marginal Cost ? Ana's profit is maximized when she produces is shirts. When she does this, the marginal cost of the last shirt she produces is S which than the price Ana receives for each shirt she sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize her profit) is S which is than the price Ana receives for each shirt she sells. Therefore, Ana's profit-maximizing quantity corresponds to the intersection of the ▼curves. Because Ana is a price taker, this last condition can also be written as .

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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