Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Lucia produces. 200 175 150 125 100 TOTAL COST AND REVENUE (Dollars) 75 50 19 DO- 231 Q □く ° Total Revenue Total Cost ㅁ A 1 2 3 5 6 7 QUANTITY (Frying pans) Profit Calculate Lucia's marginal revenue and marginal cost for the first seven frying pans 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. 40 35 30 25 я COSTS AND REVENUE (Dollars per frying pan) 10 5 ☐ ° ㅁ ° ☐ D " ° ° ☐ 0 о 1 2 5 6 7 8 QUANTITY (Frying pans) Marginal Revenue --- Marginal Cost Lucia's profit is maximised when she produces which is frying pans. When she does this, the marginal cost of the last frying pan she produces is than the price Lucia receives for each frying pan she sells. The marginal cost of producing an additional frying pan (that is, one more frying pan than would maximise her profit) is S which is than the price Lucia receives for each frying pan she sells. Therefore, Lucia's profit-maximising quantity corresponds to the intersection of the curves. Because Lucia is a price taker, this last condition can also be written as
Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Lucia produces. 200 175 150 125 100 TOTAL COST AND REVENUE (Dollars) 75 50 19 DO- 231 Q □く ° Total Revenue Total Cost ㅁ A 1 2 3 5 6 7 QUANTITY (Frying pans) Profit Calculate Lucia's marginal revenue and marginal cost for the first seven frying pans 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. 40 35 30 25 я COSTS AND REVENUE (Dollars per frying pan) 10 5 ☐ ° ㅁ ° ☐ D " ° ° ☐ 0 о 1 2 5 6 7 8 QUANTITY (Frying pans) Marginal Revenue --- Marginal Cost Lucia's profit is maximised when she produces which is frying pans. When she does this, the marginal cost of the last frying pan she produces is than the price Lucia receives for each frying pan she sells. The marginal cost of producing an additional frying pan (that is, one more frying pan than would maximise her profit) is S which is than the price Lucia receives for each frying pan she sells. Therefore, Lucia's profit-maximising quantity corresponds to the intersection of the curves. Because Lucia is a price taker, this last condition can also be written as
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through
seven (inclusive) that Lucia produces.
200
175
150
125
100
TOTAL COST AND REVENUE (Dollars)
75
50
19
DO-
231
Q
□く
°
Total Revenue
Total Cost
ㅁ
A
1
2
3
5
6
7
QUANTITY (Frying pans)
Profit
Calculate Lucia's marginal revenue and marginal cost for the first seven frying pans 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.
40
35
30
25
я
COSTS AND REVENUE (Dollars per frying pan)
10
5
☐
°
ㅁ
°
☐
D
"
°
°
☐
0
о
1
2
5
6
7
8
QUANTITY (Frying pans)
Marginal Revenue
---
Marginal Cost
Lucia's profit is maximised when she produces
which is
frying pans. When she does this, the marginal cost of the last frying pan she produces is
than the price Lucia receives for each frying pan she sells. The marginal cost of producing an additional frying pan
(that is, one more frying pan than would maximise her profit) is S
which is
than the price Lucia receives for each frying pan she
sells. Therefore, Lucia's profit-maximising quantity corresponds to the intersection of the
curves. Because
Lucia is a price taker, this last condition can also be written as
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