Calculate Madison's marginal revenue and marginal cost for the first seven cardigans they produce, 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. ? COSTS AND REVENUE (Dollars per cardigan) 40 35 30 25 20 15 10 5 0 0 1 2 3 5 QUANTITY (Cardigans) 4 6 7 Madison's profit is maximized when they produce a total of $15, an amount less 8 ·|· Marginal Revenue Marginal Cost 5 cardigans. At this quantity, the marginal cost of the final cardigan they produce is than the price received for each cardigan they sell. At this point, the marginal cost of producing one more cardigan (the first cardigan beyond the profit maximizing quantity) is $25, , an amount greater than the price received for each cardigan they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the marginal cost and marginal revenue curves. Because Madison is a price taker, the previous condition is equivalent to P = MC

Calculate Madison's marginal revenue and marginal cost for the first seven cardigans they produce, 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. ? COSTS AND REVENUE (Dollars per cardigan) 40 35 30 25 20 15 10 5 0 0 1 2 3 5 QUANTITY (Cardigans) 4 6 7 Madison's profit is maximized when they produce a total of $15, an amount less 8 ·|· Marginal Revenue Marginal Cost 5 cardigans. At this quantity, the marginal cost of the final cardigan they produce is than the price received for each cardigan they sell. At this point, the marginal cost of producing one more cardigan (the first cardigan beyond the profit maximizing quantity) is $25, , an amount greater than the price received for each cardigan they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the marginal cost and marginal revenue curves. Because Madison is a price taker, the previous condition is equivalent to P = MC

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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