3. Profit maximization using total cost and total revenue curves Suppose Cho 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 Cho's total cost curve. Lise the blue points (aircle symbol) to plat total revenue and the green points (triangle symbal) to plot profit for shirts quantities zero through seven (inclusive) that Cho produces. 200 175 Total Revenue 190 Total Cost 125 Prott 100 75 25 25 QUANTITY (Sins) Cakculate Cho's marginal revenue and marginal cost for the first seven shirts she produces, and plot them on the following graph. Use the blue points (circde symbol) to piot marginal revenue and the orange points (square symbal) to plot marginal cost at each quantity. Marginal Reverue Marginal Cost 1. QUANTITY (Ss) Cho's profit is maximized when she produces shirts. When she does this, the marginal cost of the last shirt she produces is which is - than the price Cho recelves 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 v than the price Cho receives for each shirt she sells. Therefore, Cho's profit-maximizing quantity corresponds to the intersection of the curves. Because Cho is a price taker, this last condition can also be written as RRR CUSIS ANU VENUE oears per snt (seon) anwaAH ISnn ni

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3. Profit maximization using total cost and total revenue curves

Suppose Cho 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 Cho'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 Cho produces.
3. Profit maximization using total cost and total revenue curves
Suppose Cho 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 Cho's total cost curve.
Lise the blue paints (circle symbal) to plat total revenue and the green points (triangie symbal) to plot profit for shirts quantities zero through seven
(inclusive) that Cho produces.
200
175
Total Revenue
190
Total Cost
A
125
Proft
100
75
50
25
-25
1
4
QUANTITY (Shits)
Calculate Cho's marginal
and marginal cost for
frst seven shirts she produces, and plot them an the following graph. Lise
blve paints
(circde symbol) to piot marginal revenue and the orange points (square symbal) to plot marginal cast at each quantity.
40
Marginal Reverue
30
25
Marginal Cost
20
10
DI
QUANTITY (Shirts)
Cho's profit is maximized when she produces
shirts. When she does this, the marginal cost of the last shirt she produces is S
which
is
- than the price Cho 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
which is
than the price Cho receives for each shirt she sells. Therefore, Cho's profit-maximizing
quantity corresponds to the intersection of the
v curves. Because Cho is a price taker, this last condition
can also be written as
(seon) annAAAH CIN Is0O TOI
(uS Jad seoni anNAAD4 INY RISOO
Transcribed Image Text:3. Profit maximization using total cost and total revenue curves Suppose Cho 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 Cho's total cost curve. Lise the blue paints (circle symbal) to plat total revenue and the green points (triangie symbal) to plot profit for shirts quantities zero through seven (inclusive) that Cho produces. 200 175 Total Revenue 190 Total Cost A 125 Proft 100 75 50 25 -25 1 4 QUANTITY (Shits) Calculate Cho's marginal and marginal cost for frst seven shirts she produces, and plot them an the following graph. Lise blve paints (circde symbol) to piot marginal revenue and the orange points (square symbal) to plot marginal cast at each quantity. 40 Marginal Reverue 30 25 Marginal Cost 20 10 DI QUANTITY (Shirts) Cho's profit is maximized when she produces shirts. When she does this, the marginal cost of the last shirt she produces is S which is - than the price Cho 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 which is than the price Cho receives for each shirt she sells. Therefore, Cho's profit-maximizing quantity corresponds to the intersection of the v curves. Because Cho is a price taker, this last condition can also be written as (seon) annAAAH CIN Is0O TOI (uS Jad seoni anNAAD4 INY RISOO
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