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 . MindTap - Cengage Le X b My Questions | bartlet xC Consider The Compet x a 10 Steps to Building a xy perfect competition d xO AT&Tx +A 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 Tools(?A-ZEE Rental Options200P College Success Tips175Career Success TipsTotal Revenue150Total Cost? Help125O Give FeedbackProfit1007550bongo25-253QUANTITY (Teddy bears)24578.12:06 PMP Type here to searchL100%44°F12/8/2021TO TAL COST AND REVENUE (Dollars)x ... MindTap - Cengage Le X b My Questions | bartlet xC Consider The Compet x a 10 Steps to Building a xy perfect competition d xO AT&Tx +A 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)Diue poims (CI Cie SYIDUI) LU PIOL Imaigmar evenue anu Lne urdnye pomts (S4uare symoUI) LU PIOL Tmar yinar coSL al eacn quaTLILy.Courses(?)O Catalog and Study ToolsA-ZEE Rental Options40P College Success Tips35Marginal RevenueCareer Success Tips30? Help25Marginal CostO Give Feedback201510bonge51.2347QUANTITY (Teddy bears)12:06 PMP Type here to searchL100%44°F12/8/2021COSTS AND REVENUE (Dollars per teddy bear)x ...

Marginal Revenue (MR): Marginal revenue (MR) is that the increase in revenue that results from the…

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

See similar textbooks

Related questions

Question

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 .

MindTap - Cengage Le X b My Questions | bartlet x
C Consider The Compet x a 10 Steps to Building a x
y perfect competition d x
O AT&T
x +
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
«
* CENGAGEMINDTAP
Q Search this course
Love v
A My Home
Homework (Ch 14)
seven (inclusive) that Poornima produces.
Courses
O Catalog and Study Tools
(?
A-Z
EE Rental Options
200
P College Success Tips
175
Career Success Tips
Total Revenue
150
Total Cost
? Help
125
O Give Feedback
Profit
100
75
50
bongo
25
-25
3
QUANTITY (Teddy bears)
2
4
5
7
8.
12:06 PM
P Type here to search
L
100%
44°F
12/8/2021
TO TAL COST AND REVENUE (Dollars)
x ...

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.