Calculate Kenji's marginal revenue and marginal cost for the first seven shirts he 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 Marginal Cost 0 3 1 4 5 6 8 7 QUANTITY (Shirts) , which is shirts. When he does this, the marginal cost of the last shirt he produces is $ Kenji's profit is maximized when he produces than the price Kenji receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Kenji receives for each shirt he sells. Therefore, Kenji's profit-maximizing curves. Because Kenji is a price taker, this last condition I which is would maximize his profit) is $ quantity corresponds to the intersection of the can also be written as 5 COSTS AND REVENUE (Dollars per shirt) 8 9 15 10 0 2 6

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
Section: Chapter Questions
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Homework (Ch 14)
3. Profit maximization using total cost and total revenue curves
Suppose Kenji 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 Kenji'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 Kenji produces.
200
175
150
Total Cost
125
100
7
TOTAL COST AND REVENUE (Dollars)
25
-25
0
☐
1
0
2
■
■
3
4
5
QUANTITY (Shirts)
6
8
O
Total Revenue
A
Profit
Transcribed Image Text:Homework (Ch 14) 3. Profit maximization using total cost and total revenue curves Suppose Kenji 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 Kenji'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 Kenji produces. 200 175 150 Total Cost 125 100 7 TOTAL COST AND REVENUE (Dollars) 25 -25 0 ☐ 1 0 2 ■ ■ 3 4 5 QUANTITY (Shirts) 6 8 O Total Revenue A Profit
Homework (Ch 14)
Calculate Kenji's marginal revenue and marginal cost for the first seven shirts he 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
--
Marginal Cost
4
3
1
0
6
7
8
5
QUANTITY (Shirts)
, which is
shirts. When he does this, the marginal cost of the last shirt he produces is $
Kenji's profit is maximized when he produces
than the price Kenji receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than
than the price Kenji receives for each shirt he sells. Therefore, Kenji's profit-maximizing
which is
would maximize his profit) is $
quantity corresponds to the intersection of the
curves. Because Kenji is a price taker, this last condition
I can also be written as
5₁
COSTS AND REVENUE (Dollars per shirt)
5
0
2
Search this
Transcribed Image Text:Homework (Ch 14) Calculate Kenji's marginal revenue and marginal cost for the first seven shirts he 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 -- Marginal Cost 4 3 1 0 6 7 8 5 QUANTITY (Shirts) , which is shirts. When he does this, the marginal cost of the last shirt he produces is $ Kenji's profit is maximized when he produces than the price Kenji receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Kenji receives for each shirt he sells. Therefore, Kenji's profit-maximizing which is would maximize his profit) is $ quantity corresponds to the intersection of the curves. Because Kenji is a price taker, this last condition I can also be written as 5₁ COSTS AND REVENUE (Dollars per shirt) 5 0 2 Search this
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