EBK HEALTH ECONOMICS AND POLICY
EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN: 9781337668279
Author: Henderson
Publisher: YUZU
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Chapter 1, Problem 4QAP
To determine

The concept of scarcity and its importance in economic analysis.

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Sam's profit is maximized when he produces   shirts. When he does this, the marginal cost of the last shirt he produces is   , which is    than the price Sam receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize his profit) is   , which is    than the price Sam receives for each shirt he sells. Therefore, Sam's profit-maximizing quantity corresponds to the intersection of the    curves. Because Sam is a price taker, this last condition can also be written as    .
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