Calculate Raphael'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. COSTS AND REVENUE (Dollars per shirt) 40 35 30 25 20 15 S 10 0 0 1 2 3 5 QUANTITY (Shirts) 4 Raphael's profit is maximized when he produces is would maximize his profit) is $ 6 7 8 Marginal Revenue -O- Marginal Cost (? shirts. When he does this, the marginal cost of the last shirt he produces is $ , which than the price Raphael receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Raphael receives for each shirt he sells. Therefore, Raphael's profit- , which is maximizing quantity corresponds to the intersection of the curves. Because Raphael is a price taker, this last condition can also be written as

Calculate Raphael'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. COSTS AND REVENUE (Dollars per shirt) 40 35 30 25 20 15 S 10 0 0 1 2 3 5 QUANTITY (Shirts) 4 Raphael's profit is maximized when he produces is would maximize his profit) is $ 6 7 8 Marginal Revenue -O- Marginal Cost (? shirts. When he does this, the marginal cost of the last shirt he produces is $ , which than the price Raphael receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Raphael receives for each shirt he sells. Therefore, Raphael's profit- , which is maximizing quantity corresponds to the intersection of the curves. Because Raphael 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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Consider the business whose Total Cost and Total Revenue for various quantities of a particular product are shown in the table below. Quantity Total Cost Total Revenue 0 100 0 1 250 500 2 350 950 3 500 1350 4 725 1700 5 1000 2000 6 1400 2250 Use the Profit-Maximizing Rule to explain the quantity that this business should produce to maximize its profits. Answer must both state the number to produce and an explanation of how you used the profit-maximizing rule to arrive at that number.
Suppose she runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $20 per teddy bear.
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