**Graph Explanation:**The graph illustrates the relationship between costs and revenue for producing teddy bears, with the quantity of teddy bears on the x-axis and costs and revenue (in dollars per teddy bear) on the y-axis. - **Marginal Revenue:** Represented by a blue circle line.- **Marginal Cost:** Represented by an orange square line.**Text Explanation:**Lorenzo's profit is maximized when he produces [blank] teddy bears. When he does this, the marginal cost of the last teddy bear he produces is $[blank], which is [blank] than the price Lorenzo receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is $[blank], which is [blank] than the price Lorenzo receives for each teddy bear he sells. Therefore, Lorenzo's profit-maximizing quantity corresponds to the intersection of the [blank] curves. Because Lorenzo is a price taker, this last condition can also be written as [blank].

Lorenzo's profit is maximized when he produces teddy bears. When he does this, the marginal cost of the last teddy bear he produces is $ , which is than the price Lorenzo receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is $ , which is than the price Lorenzo receives for each teddy bear he sells. Therefore, Lorenzo's profit-maximizing quantity corresponds to the intersection of the curves. Because Lorenzo is a price taker, this last condition can also be written as

Lorenzo's profit is maximized when he produces teddy bears. When he does this, the marginal cost of the last teddy bear he produces is $ , which is than the price Lorenzo receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is $ , which is than the price Lorenzo receives for each teddy bear he sells. Therefore, Lorenzo's profit-maximizing quantity corresponds to the intersection of the curves. Because Lorenzo 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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Part a-f
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