ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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3. Profit maximization using total cost and total revenue curves
Suppose Sam 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 Sam'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 Sam
produces, including zero shirts.
TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars)
200
175
150
125
100
75
50
25
a
-25
0
3
6
QUANTITY OF OUTPUT (Shirts)
2
4
5
Total Cost
7
8
O
Total Revenue
Profit
(?)
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Transcribed Image Text:3. Profit maximization using total cost and total revenue curves Suppose Sam 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 Sam'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 Sam produces, including zero shirts. TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars) 200 175 150 125 100 75 50 25 a -25 0 3 6 QUANTITY OF OUTPUT (Shirts) 2 4 5 Total Cost 7 8 O Total Revenue Profit (?)
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