Suppose Gilberto runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Gilberto'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 Gilberto produces, including zero shirts. 125 100 8 TOTAL COST AND REVENUE (Dollars) -60 30 8 COSTS AND REVENUE (Dollars per shirt) 50 15 1 10 2 1 2 □ 5 QUANTITY (Shirts) Calculate Gliberto'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. 3 5 QUANTITY (Shirts) 6 Gilberto's profit is maximized when he produces Total Cost 6 7 7 8 is would maximize his profit) is S which is maximizing quantity corresponds to the intersection of the last condition can also be written as Total Revenue 8 Profit which shirts. When he does this, the marginal cost of the last shirt he produces is $ than the price Gilberto receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Gilberto receives for each shirt he sells. Therefore, Gilberto's profit- curves. Because Gilberto is a price taker, this = Marginal Revenue -0- Marginal Cost
Suppose Gilberto runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Gilberto'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 Gilberto produces, including zero shirts. 125 100 8 TOTAL COST AND REVENUE (Dollars) -60 30 8 COSTS AND REVENUE (Dollars per shirt) 50 15 1 10 2 1 2 □ 5 QUANTITY (Shirts) Calculate Gliberto'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. 3 5 QUANTITY (Shirts) 6 Gilberto's profit is maximized when he produces Total Cost 6 7 7 8 is would maximize his profit) is S which is maximizing quantity corresponds to the intersection of the last condition can also be written as Total Revenue 8 Profit which shirts. When he does this, the marginal cost of the last shirt he produces is $ than the price Gilberto receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Gilberto receives for each shirt he sells. Therefore, Gilberto's profit- curves. Because Gilberto is a price taker, this = Marginal Revenue -0- Marginal Cost
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
113.
Subject :- Economy
Transcribed Image Text:Suppose Gilberto runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is
$10 per shirt.
The following graph shows Gilberto'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 Gilberto
produces, including zero shirts.
75
D
50
F
25
0
TOTAL COST AND REVENUE (Dollars)
125
COSTS AND REVENUE (Dollars per shirt)
100
-25
-60
30
25
20
15
10
0
0
1
0
Calculate Gilberto'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.
2
1
4
5
QUANTITY (Shirts)
2
3
5
QUANTITY (Shirts)
4
D
Gilberto's profit is maximized when he produces
Total Cost
6
7 8
7
Total Revenue
8
is
would maximize his profit) is $ , which is
maximizing quantity corresponds to the intersection of the
last condition can also be written as
Profit
(?)
Marginal Revenue
Marginal Cost
which
shirts. When he does this, the marginal cost of the last shirt he produces is $
than the price Gilberto receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than
than the price Gilberto receives for each shirt he sells. Therefore, Gilberto's profit-
curves. Because Gilberto is a price taker, this
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