Calculate Cho's marginal revenue and marginal cost for the first seven frying pans 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 at each quantity. (? 40 35 Marginal Revenue 30 25 Marginal Cost 20 10 2. 7 QUANTITY (Frying pans) Cho's profit is maximized when she produces frying pans. When she does this, the marginal cost of the last frying pan she produces is , which is v than the price Cho receives for each frying pan she sells. The marginal cost of producing an additional frying pan (that is, one more frying pan than would maximize her profit) is s which is than the price Cho receives for each frying pan she sells. Therefore, Cho's profit-maximizing quantity corresponds to the intersection of the Cho is a price taker, this last condition can also be written as v curves. Because COSTS AND REVENUE (Dollars per frying pan)

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Chapter1: Making Economics Decisions
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3. Profit maximization using total cost and total revenue curves
Suppose Cho runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market
price is $25 per frying pan.
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 frying pans quantities zero through
seven (inclusive) that Cho produces.
200
175
Total Revenue
150
Total Cost
125
Profit
100
75
50
25
-25
1
2
3
4
7
8
QUANTITY (Frying pans)
Calculate Cho's marginal revenue and marginal cost for the first seven frying pans 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 at each quantity.
TOTAL COST AND REVENUE (Dollars)
Transcribed Image Text:3. Profit maximization using total cost and total revenue curves Suppose Cho runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $25 per frying pan. 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 frying pans quantities zero through seven (inclusive) that Cho produces. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 50 25 -25 1 2 3 4 7 8 QUANTITY (Frying pans) Calculate Cho's marginal revenue and marginal cost for the first seven frying pans 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 at each quantity. TOTAL COST AND REVENUE (Dollars)
Calculate Cho's marginal revenue and marginal cost for the first seven frying pans 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 at each quantity.
40
35
Marginal Revenue
30
25
Marginal Cost
20
15
10
2
5
7
8
QUANTITY (Frying pans)
Cho's profit is maximized when she produces
frying pans. When she does this, the marginal cost of the last frying pan she produces is
, which is
v than the price Cho receives for each frying pan she sells. The marginal cost of producing an additional frying pan
(that is, one more frying pan than would maximize her profit) iss
which is
v than the price Cho receives for each frying pan 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
COSTS AND REVENUE (Dollars per frying pan)
Transcribed Image Text:Calculate Cho's marginal revenue and marginal cost for the first seven frying pans 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 at each quantity. 40 35 Marginal Revenue 30 25 Marginal Cost 20 15 10 2 5 7 8 QUANTITY (Frying pans) Cho's profit is maximized when she produces frying pans. When she does this, the marginal cost of the last frying pan she produces is , which is v than the price Cho receives for each frying pan she sells. The marginal cost of producing an additional frying pan (that is, one more frying pan than would maximize her profit) iss which is v than the price Cho receives for each frying pan 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 COSTS AND REVENUE (Dollars per frying pan)
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