Calculate Rosa's marginal revenue and marginal cost for the first seven teddy bears 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 cot. 40 35 Marginal Revenue Marginal Cost 4 5 6. 7 8 QUANTITY (Teddy bears) Rosa's profit is maximized when she produces teddy bears. When she does this, the marginal cost of the last teddy bear she produces is which is than the price Rosa receives for each teddy bear she sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize her profit) is $ which is than the price Rosa receives for each teddy bear she sells. Therefore, Rosa's profit-maximizing quantity corresponds to the intersection of the curves. Because Rosa is a price taker, this last condition can also be written as COSTS AND REVENUE (Dollars per teddy bear)

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Chapter1: Making Economics Decisions
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Calculate Rosa's marginal revenue and marginal cost for the first seven teddy bears 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.
35
Marginal Revenue
30
25
Marginal Cost
20
10
1
3
7 8
QUANTITY (Teddy bears)
Rosa's profit is maximized when she produces
teddy bears. When she does this, the marginal cost of the last teddy bear she produces is
24
which is
than the price Rosa receives for each teddy bear she sells. The marginal cost of producing an additional teddy bear
(that is, one more teddy bear than would maximize her profit) is $
which is
than the price Rosa receives for each teddy bear
she sells. Therefore, Rosa's profit-maximizing quantity corresponds to the intersection of the
curves.
Because Rosa is a price taker, this last condition can also be written as
COSTS AND REVENUE (Dollars per teddy bear)
15
40
Transcribed Image Text:Calculate Rosa's marginal revenue and marginal cost for the first seven teddy bears 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. 35 Marginal Revenue 30 25 Marginal Cost 20 10 1 3 7 8 QUANTITY (Teddy bears) Rosa's profit is maximized when she produces teddy bears. When she does this, the marginal cost of the last teddy bear she produces is 24 which is than the price Rosa receives for each teddy bear she sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize her profit) is $ which is than the price Rosa receives for each teddy bear she sells. Therefore, Rosa's profit-maximizing quantity corresponds to the intersection of the curves. Because Rosa is a price taker, this last condition can also be written as COSTS AND REVENUE (Dollars per teddy bear) 15 40
Suppose Rosa 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.
The following graph shows Rosa'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 teddy bears that Rosa
produces, including zero teddy bears.
200
175
Total Revenue
150
125
Total Cost
Profit
100
75
50
25
-25
1
3
4.
8
QUANTITY (Teddy bears)
TOTAL COST AND REVENUE (Dollars)
Transcribed Image Text:Suppose Rosa 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. The following graph shows Rosa'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 teddy bears that Rosa produces, including zero teddy bears. 200 175 Total Revenue 150 125 Total Cost Profit 100 75 50 25 -25 1 3 4. 8 QUANTITY (Teddy bears) TOTAL COST AND REVENUE (Dollars)
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