Mj Calculate Nick'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.COSTS AND REVENUE (Dollars per shirt)4035302520105001235QUANTITY (Shirts)4Nick's profit is maximized when he produces6which ismaximize his profit) is Squantity corresponds to the intersection of thecan also be written as78Marginal RevenueDshirts. When he does this, the marginal cost of the last shirt he produces is Swhich isthan the price Nick receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than wouldthan the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizingcurves. Because Nick is a price taker, this last conditionMarginal Cost 3. Profit maximization using total cost and total revenue curvesSuppose Nick runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20per shirt.The following graph shows Nick'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 shirts that Nickproduces, including zero shirts.TOTAL COST AND REVENUE (Dollars)200175150 +1251007550-250■1☐20D35QUANTITY (Shirts)Total Cost078Total RevenueProfit?

Marginal revenue is calculated as the ratio of change in total revenue to change in…

Calculate Nick'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. COSTS AND REVENUE (Dollars per shirt) 40 2 30 25 20 10 5 0 0 1 2 3 5 QUANTITY (Shirts) 4 7 Nick's profit is maximized when he produces 8 Marginal Revenue D Marginal Cost shirts. When he does this, the marginal cost of the last shirt he produces is $ which is than the price Nick receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would which is than the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizing maximize his profit) is 5 quantity corresponds to the intersection of the curves. Because Nick is a price taker, this last condition can also be written as "

Calculate Nick'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. COSTS AND REVENUE (Dollars per shirt) 40 2 30 25 20 10 5 0 0 1 2 3 5 QUANTITY (Shirts) 4 7 Nick's profit is maximized when he produces 8 Marginal Revenue D Marginal Cost shirts. When he does this, the marginal cost of the last shirt he produces is $ which is than the price Nick receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would which is than the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizing maximize his profit) is 5 quantity corresponds to the intersection of the curves. Because Nick is a price taker, this last condition can also be written as "

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Calculate Nick'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.
COSTS AND REVENUE (Dollars per shirt)
40
35
30
25
20
10
5
0
0
1
2
3
5
QUANTITY (Shirts)
4
Nick's profit is maximized when he produces
6
which is
maximize his profit) is S
quantity corresponds to the intersection of the
can also be written as
7
8
Marginal Revenue
D
shirts. When he does this, the marginal cost of the last shirt he produces is S
which is
than the price Nick receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would
than the price Nick receives for each shirt he sells. Therefore, Nick's profit-maximizing
curves. Because Nick is a price taker, this last condition
Marginal Cost

3. Profit maximization using total cost and total revenue curves
Suppose Nick 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 Nick'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 shirts that Nick
produces, including zero shirts.
TOTAL COST AND REVENUE (Dollars)
200
175
150 +
125
100
75
50
-25
0
■
1
☐
2
0
D
3
5
QUANTITY (Shirts)
Total Cost
0
7
8
Total Revenue
Profit
?

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Step 1: Introduce the concept of marginal cost and marginal revenue

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