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COSTS AND REVENUE (Dollars per shirt) TOTAL COST AND REVENUE (Dollars) uppose Nick runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $25 er shirt. me following graph shows Nick's total cost curve. se the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Nick roduces, including zero shirts. 175 Total Revenue 150 Total Cost A 125 Profit 100 75 25 2 3 QUANTITY (Shirts) Calculate Nick'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. 36 80 26 20 15 10 2 QUANTITY (Shirts) 0 Marginal Revenue -D- Marginal Cost Nick's profit is maximized when he produces shirts. When he does this, the marginal cost of the last shirt he produces is S which is than the price Nick 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 5 than the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizing which is quantity corresponds to the intersection of the curves. Because Nick is a price taker, this last condition can also be written as

COSTS AND REVENUE (Dollars per shirt) TOTAL COST AND REVENUE (Dollars) uppose Nick runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $25 er shirt. me following graph shows Nick's total cost curve. se the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Nick roduces, including zero shirts. 175 Total Revenue 150 Total Cost A 125 Profit 100 75 25 2 3 QUANTITY (Shirts) Calculate Nick'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. 36 80 26 20 15 10 2 QUANTITY (Shirts) 0 Marginal Revenue -D- Marginal Cost Nick's profit is maximized when he produces shirts. When he does this, the marginal cost of the last shirt he produces is S which is than the price Nick 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 5 than the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizing which is quantity corresponds to the intersection of the curves. Because Nick is a price taker, this last condition can also be written as

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: The Cost Of Production
Section: Chapter Questions
Problem 1CQQ
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muppose Nick runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $25 er shirt. The following graph shows Nick'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 Nick produces, including zero shirts. VENUE (Dollars) 175 150 Total Cost 125 100 75 50 2 3 7 QUANTITY (Shirts) Total Revenue A Profit Calculate Nick'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. COSTS AND REVENUE Dollars per shirt) 15 10 36 6 6 QUANTITY (Shirts) Nick's profit is maximized when he produces Marginal Revenue ロー Marginal Cost shirts. When he does this, the marginal cost of the last shirt he produces is $ which is than the price Nick 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 S than the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizing which is quantity corresponds to the intersection of the curves. Because Nick is a price taker, this last condition can also be written as
Transcribed Image Text:muppose Nick runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $25 er shirt. The following graph shows Nick'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 Nick produces, including zero shirts. VENUE (Dollars) 175 150 Total Cost 125 100 75 50 2 3 7 QUANTITY (Shirts) Total Revenue A Profit Calculate Nick'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. COSTS AND REVENUE Dollars per shirt) 15 10 36 6 6 QUANTITY (Shirts) Nick's profit is maximized when he produces Marginal Revenue ロー Marginal Cost shirts. When he does this, the marginal cost of the last shirt he produces is $ which is than the price Nick 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 S than the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizing which is quantity corresponds to the intersection of the curves. Because Nick is a price taker, this last condition can also be written as
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