Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper. The following graph shows Madison's total cost curve. (image work) (image work) Madison's profit is maximized when they produce a total of _____ rompers. At this quantity, the marginal cost of the final romper they produce is $___, an amount (greater/less) than the price received for each romper they sell. At this point, the marginal cost of producing one more romper (the first romper beyond the profit-maximizing quantity) is $____, an amount (greater/less) than the price received for each romper they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the ___________ curves. Because Madison is a price taker, the previous condition is equivalent to ____.
Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper. The following graph shows Madison's total cost curve. (image work) (image work) Madison's profit is maximized when they produce a total of _____ rompers. At this quantity, the marginal cost of the final romper they produce is $___, an amount (greater/less) than the price received for each romper they sell. At this point, the marginal cost of producing one more romper (the first romper beyond the profit-maximizing quantity) is $____, an amount (greater/less) than the price received for each romper they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the ___________ curves. Because Madison is a price taker, the previous condition is equivalent to ____.
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 9SQP
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Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper.
The following graph shows Madison's total cost curve.
(Image down below)
3. Profit maximization using total cost and total revenue curves
Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper.
The following graph shows Madison's total cost curve.
(image work)
(image work)
Madison's profit is maximized when they produce a total of _____ rompers. At this quantity, the marginal cost of the final romper they produce is $___, an amount (greater/less) than the price received for each romper they sell. At this point, the marginal cost of producing one more romper (the first romper beyond the profit-maximizing quantity) is $____, an amount (greater/less) than the price received for each romper they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the ___________ curves. Because Madison is a price taker, the previous condition is equivalent to ____.
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A perfectly competitive firm is a price taker and can sell any quantity of the commodity at the market determined price.
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