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is $ , an amount Rian's profit is maximized when they produce a total of phone cases. At this quantity, the marginal cost of the final phone case they produce than the price received for each phone case they sell. At this point, the marginal cost of producing one more phone case (the first phone case beyond the profit maximizing quantity) is $ , an amount than the price received for each phone case they sell. Therefore, Rian's profit-maximizing quantity occurs at the point of intersection between the curves. Because Rian is a price taker, the previous condition is equivalent to

is $ , an amount Rian's profit is maximized when they produce a total of phone cases. At this quantity, the marginal cost of the final phone case they produce than the price received for each phone case they sell. At this point, the marginal cost of producing one more phone case (the first phone case beyond the profit maximizing quantity) is $ , an amount than the price received for each phone case they sell. Therefore, Rian's profit-maximizing quantity occurs at the point of intersection between the curves. Because Rian is a price taker, the previous condition is equivalent to

ENGR.ECONOMIC ANALYSIS
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

Economics

Calculate Rian's marginal revenue and marginal cost for the first seven phone cases 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. hone case) COSTS AND REVENUE (Dollars per 40 35 25 20 0 0 1 2 3 4 5 QUANTITY (Phone cases) 6 7 8 Marginal Revenue Marginal Cost Rian's profit is maximized when they produce a total of is $ an amount phone cases. At this quantity, the marginal cost of the final phone case they produce than the price received for each phone case they sell. At this point, the marginal cost of producing one more phone case (the first phone case beyond the profit maximizing quantity) is $ , an amount than the price received for each phone case they sell. Therefore, Rian's profit-maximizing quantity occurs at the point of intersection between the curves. Because Rian is a price taker, the previous condition is equivalent to
Transcribed Image Text:Calculate Rian's marginal revenue and marginal cost for the first seven phone cases 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. hone case) COSTS AND REVENUE (Dollars per 40 35 25 20 0 0 1 2 3 4 5 QUANTITY (Phone cases) 6 7 8 Marginal Revenue Marginal Cost Rian's profit is maximized when they produce a total of is $ an amount phone cases. At this quantity, the marginal cost of the final phone case they produce than the price received for each phone case they sell. At this point, the marginal cost of producing one more phone case (the first phone case beyond the profit maximizing quantity) is $ , an amount than the price received for each phone case they sell. Therefore, Rian's profit-maximizing quantity occurs at the point of intersection between the curves. Because Rian is a price taker, the previous condition is equivalent to
3. Profit maximization using total cost and total revenue curves Suppose Rian operates a handicraft pop-up retail shop that sells phone cases. Assume a perfectly competitive market structure for phone cases with a market price equal to $20 per phone case. The following graph shows Rian's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for phone cases for quantities zero through seven (including zero and seven) that Rian produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 0 □ 1 2 ■ ☐ 4 3 5 QUANTITY (Phone cases) ▬ 6 Total Cost 7 8 o Total Revenue Profit ?
Transcribed Image Text:3. Profit maximization using total cost and total revenue curves Suppose Rian operates a handicraft pop-up retail shop that sells phone cases. Assume a perfectly competitive market structure for phone cases with a market price equal to $20 per phone case. The following graph shows Rian's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for phone cases for quantities zero through seven (including zero and seven) that Rian produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 0 □ 1 2 ■ ☐ 4 3 5 QUANTITY (Phone cases) ▬ 6 Total Cost 7 8 o Total Revenue Profit ?
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