Calculate Ana's marginal revenue and marginal cost for the first seven teddy bears she 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. llars per teddy bear) 25 1 2 QUANTITY (Teddy bears) O Marginal Revenue Marginal Cost Ana's profit is maximized when she produces S, which is teddy bears. When she does this, the marginal cost of the last teddy bear she produces is ✓than the price Ana receives for each teddy bear she sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize her profit) is S, which is than the price Ana receives for each teddy bear she sells. Therefore, Ana's profit-maximizing quantity corresponds to the intersection of the ✓curves. Because

Calculate Ana's marginal revenue and marginal cost for the first seven teddy bears she 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. llars per teddy bear) 25 1 2 QUANTITY (Teddy bears) O Marginal Revenue Marginal Cost Ana's profit is maximized when she produces S, which is teddy bears. When she does this, the marginal cost of the last teddy bear she produces is ✓than the price Ana receives for each teddy bear she sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize her profit) is S, which is than the price Ana receives for each teddy bear she sells. Therefore, Ana's profit-maximizing quantity corresponds to the intersection of the ✓curves. Because

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Chapter1: Making Economics Decisions

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Question

Aplia Homework: Production and Cost in the Firm
4. Profit maximization using total cost and total revenue curves
Suppose Ana runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a price-taker market, and the market
price is $10 per teddy bear.
The following graph shows Ana'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 teddy bears that Ana
produces, including zero teddy bears.
125
100
75
P
0
2
QUANTITY (Teddy bears)
6
Total Cost
☐
8
***
Total Revenue
A
Profit
(?)

Calculate Ana's marginal revenue and marginal cost for the first seven teddy bears she 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 teddy bear)
30
20
15
10
1
2
3
4
5
QUANTITY (Teddy bears)
6
7
8
Marginal Revenue
-D
Marginal Cost
Ana's profit is maximized when she produces
$, which is
teddy bears. When she does this, the marginal cost of the last teddy bear she produces is
✓than the price Ana receives for each teddy bear she sells. The marginal cost of producing an additional teddy bear
(that is, one more teddy bear than would maximize her profit) is $, which is
than the price Ana receives for each teddy bear she
curves. Because
sells. Therefore, Ana's profit-maximizing quantity corresponds to the intersection of the
Ana is a price taker, this last condition can also be written as

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