Suppose Poornima runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear.The following graph shows Poornima's total cost curve.Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Poornima produces. Calculate Poornima'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 at each quantity. Poornima'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 Poornima 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 Poornima receives for each teddy bear she sells. Therefore, Poornima's profit-maximizing quantity corresponds to the intersection of the curves. Because Poornima is a price taker, this last condition can also be written as . b My Questions | bartleby* MindTap - Cengage LearningA ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=59828118170010561930692029148&elSBN=9780357133606&snapshotld=2556323&id=1270090816&E Apps M GmailYouTube A Maps A clickserve.dartsearc.E Reading list«* CENGAGE MINDTAPQ Search this courseLove vA My HomeHomework (Ch 14)CoursesO Catalog and Study ToolsA-ZEE Rental Options40P College Success Tips35Marginal RevenueCareer Success Tips30? Help25Marginal CostO Give Feedback201510bonge51.23457QUANTITY (Teddy bears)8:31 PMP Type here to searchL100%44°F12/8/2021COSTS AND REVENUE (Dollars per teddy bear)x ... b My Questions | bartleby* MindTap - Cengage LearningA ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=59828118170010561930692029148&elSBN=9780357133606&snapshotld=2556323&id=1270090816&E Apps M GmailYouTube A Maps A clickserve.dartsearc.E Reading list«* CENGAGEMINDTAPQ Search this courseLove vA My HomeHomework (Ch 14)seven (inclusive) that Poornima produces.CoursesO Catalog and Study ToolsA-ZEE Rental Options200P College Success Tips175Total RevenueCareer Success Tips150Total Cost? Help125ProfitO Give Feedback1007550bongo25-2512378QUANTITY (Teddy bears)8:30 PMO Type here to searchL100%44°F12/8/2021TOTAL COST AND REVENUE (Dollars)x ...

Q TC TR Profit MC MR 0 20 0 -20 - - 1 40 25 -15 20 25 2 50 50 0 10 25 3 55 75 20 5 25 4 65…

Suppose Poornima runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Poornima's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Poornima produces. Calculate Poornima'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 at each quantity. Poornima'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 Poornima 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 Poornima receives for each teddy bear she sells. Therefore, Poornima's profit-maximizing quantity corresponds to the intersection of the curves. Because Poornima 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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Suppose Poornima runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear.

The following graph shows Poornima's total cost curve.

Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Poornima produces.

Calculate Poornima'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 at each quantity.

Poornima'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 Poornima 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 Poornima receives for each teddy bear she sells. Therefore, Poornima's profit-maximizing quantity corresponds to the intersection of the curves. Because Poornima is a price taker, this last condition can also be written as .

b My Questions | bartleby
* MindTap - Cengage Learning
A ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=59828118170010561930692029148&elSBN=9780357133606&snapshotld=2556323&id=1270090816&
E Apps M Gmail
YouTube A Maps A clickserve.dartsearc.
E Reading list
«
* CENGAGE MINDTAP
Q Search this course
Love v
A My Home
Homework (Ch 14)
Courses
O Catalog and Study Tools
A-Z
EE Rental Options
40
P College Success Tips
35
Marginal Revenue
Career Success Tips
30
? Help
25
Marginal Cost
O Give Feedback
20
15
10
bonge
5
1.
2
3
4
5
7
QUANTITY (Teddy bears)
8:31 PM
P Type here to search
L
100%
44°F
12/8/2021
COSTS AND REVENUE (Dollars per teddy bear)
x ...

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