A firm has total revenue. (TR) and total cost (TC) curves as shown on the following diagram. To complete the graph, you will have to illustrate two distances with line segments. Determine the quantity of output that generates the maximum profit. Use the green points (triangle symbol) to indicate the amount of profit at this quantity of output. Then, determine the quantity of output that generates the maximum total revenue. Use the purple points (diamond symbol) to indicate the amount of revenue at this quantity of outout
A firm has total revenue. (TR) and total cost (TC) curves as shown on the following diagram. To complete the graph, you will have to illustrate two distances with line segments. Determine the quantity of output that generates the maximum profit. Use the green points (triangle symbol) to indicate the amount of profit at this quantity of output. Then, determine the quantity of output that generates the maximum total revenue. Use the purple points (diamond symbol) to indicate the amount of revenue at this quantity of outout
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A firm has total revenue (TR) and total cost (TC) curves as shown on the following diagram. To complete the graph, you will have to illustrate two
distances with line segments.
Determine the quantity of output that generates the maximum profit. Use the green points (triangle symbol) to indicate the amount of profit at this
quantity of output. Then, determine the quantity of output that generates the maximum total revenue. Use the purple points (diamond symbol) to
indicate the amount of revenue at this quantity of output.
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
Total Revenue, Total Cost
40
36
32
20
Z
20
16
12
8 +
0
D
0
2
10
n
of
TC
The maximum profit this firm can earn is
TR
6 8
10 12 14
16
Quantity of Output (Output per day)
18
20
$
Maximum Revenue
Maximum Profit
, while the maximum total revenue it can earn is
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