Homework (Ch 14) 2. The demand curve facing a competitive firm The following graph shows the daily market for medium cardboard boxes in San Diego. 20 Demand 18 Supply 16 14 12 10 8. 2 1 2 3 4. 6. 7 10 QUANTITY (Millions of medium boxes) Suppose that Falero is one of more than a hundred competitive firms in San Diego that produce such cardboard boxes. PRICE (Dollars per medium box)

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 (?)

35 3. The components of marginal revenue Raphael's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Raphael produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Raphael Faces. As you can see, to sell the additional engine, Raphael must lower his price from $160,000 to $120,000 per fire engine. Note that although Raphael gains revenue from the additional engine he sells, he also loses revenue from the initial five engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. 200 180 100 5 5 5 5 PRICE (Thousands of dollars par fra angina) 35 Domand Revenue Last 0…

CENGAGE MINDTAP Assignment 8 (Ch 14) 1 + 0 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Millions of small boxes) Suppose that Talero is one of more than a hundred competitive firms in Houston that produce such cardboard boxes. $5 Based on the preceding graph showing the daily market demand and supply curves, the price Talero must take as given is Fill in the price and the total, marginal, and average revenue Talero earns when it produces 0, 1, 2, or 3 boxes each day. Average Revenue (Dollars per box) Total Revenue Quantity (Вохes) Price Marginal Revenue (Dollars per box) (Dollars) (Dollars) 1 1 2 The demand curve that Talero faces is identical to which of its other curves? Check all that apply. Marginal revenue curve Marginal cost curve Supply curve AAA