MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781264207718
Author: Colander
Publisher: MCG CUSTOM
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Chapter 14, Problem 4QE
To determine
Identify the mistakes in each of the given figures.
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11. Profit maximization using total cost and total revenue curves
Suppose Hubert runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the
market price is $20 per teddy bear.
The following graph shows Hubert'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 Hubert produces.
200
175
Total Revenue
150
125
Total Cost
Profit
100
75
50
25
-25
3
QUANTITY (Teddy bears)
1
2
5
7
8
TOTAL COST AND REVENUE (Dollars)
Suppose Musashi runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is
$25 per shirt.
The following graph shows Musashi's total cost curve.
Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven
(inclusive) that Musashi produces.
200
175
Total Revenue
150
Total Cost
125
Profit
100
75
50
25
-25
1
2
3
7
QUANTITY (Shirts)
TOTAL COST AND REVENUE (Dollars)
co
Suppose Felix runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market
price is $20 per frying pan.
The following graph shows Felix's total cost curve.
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 Felix produces.
TOTAL COST AND REVENUE (Dollars)
200
175
150
125
100
75
50
25
0
-25
0
1
●
^
2
O
☐
A
☐
A
3
4
5
QUANTITY (Frying pans)
O
☐
6
Total Cost
☐
7
8
o
Total Revenue
Profit
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Calculate Felix's marginal revenue and marginal cost for the first seven frying pans he 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.
Chapter 14 Solutions
MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
Ch. 14.1 - Prob. 1QCh. 14.1 - Prob. 2QCh. 14.1 - Prob. 3QCh. 14.1 - Prob. 4QCh. 14.1 - Prob. 5QCh. 14.1 - Prob. 6QCh. 14.1 - Prob. 7QCh. 14.1 - Prob. 8QCh. 14.1 - Prob. 9QCh. 14.1 - Prob. 10Q
Ch. 14.A - Prob. 1QECh. 14.A - Prob. 2QECh. 14.A - Prob. 3QECh. 14.A - Prob. 4QECh. 14 - Prob. 1QECh. 14 - Prob. 2QECh. 14 - Prob. 3QECh. 14 - Prob. 4QECh. 14 - Prob. 5QECh. 14 - Prob. 6QECh. 14 - Prob. 7QECh. 14 - Prob. 8QECh. 14 - Prob. 9QECh. 14 - Prob. 10QECh. 14 - Prob. 11QECh. 14 - Prob. 12QECh. 14 - Prob. 13QECh. 14 - Prob. 14QECh. 14 - Prob. 15QECh. 14 - Prob. 16QECh. 14 - Prob. 17QECh. 14 - Prob. 18QECh. 14 - Prob. 19QECh. 14 - Prob. 20QECh. 14 - Prob. 21QECh. 14 - Prob. 22QECh. 14 - Prob. 23QECh. 14 - Prob. 24QECh. 14 - Prob. 25QECh. 14 - Prob. 1QAPCh. 14 - Prob. 2QAPCh. 14 - Prob. 3QAPCh. 14 - Prob. 4QAPCh. 14 - Prob. 5QAPCh. 14 - Prob. 6QAPCh. 14 - Prob. 7QAPCh. 14 - Prob. 1IPCh. 14 - Prob. 2IPCh. 14 - Prob. 3IPCh. 14 - Prob. 4IPCh. 14 - Prob. 5IPCh. 14 - Prob. 6IPCh. 14 - Prob. 7IPCh. 14 - Prob. 8IPCh. 14 - Prob. 9IP
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- 3. Profit maximization using total cost and total revenue curves Suppose Rian 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. TH The following graph shows Rian's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for rompers for quantities zero through seven (including zero and seven) that Rian produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 -25 DO 0 1 2 3 5 QUANTITY (Rompers) 4 6 Total Cost 7 8 Total Revenue Profit ?arrow_forwardCalculate Rian's marginal revenue and marginal cost for the first seven phone cases they produce, 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. COSTS AND REVENUE (Dollars per phone case) 40 35 30 25 20 15 10 5 0 0 1 2 3 4 5 QUANTITY (Phone cases) 6 7 8 Marginal Revenue Marginal Cost ? Rian's profit is maximized when they produce a total of is $ an amount phone cases. At this quantity, the marginal cost of the final phone case they produce than the price received for each phone case they sell. At this point, the marginal cost of producing one more phone case (the first phone case beyond the profit maximizing quantity) is $ an amount than the price received for each phone case they sell. Therefore, Rian's profit-maximizing quantity occurs at the point of intersection between the curves. Because Rian is a price taker, the previous condition is equivalent toarrow_forwardCalculate Darnell's marginal revenue and marginal cost for the first seven shirts he 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. COSTS AND REVENUE (Dollars per shirt) 40 35 30 25 20 15 10 5 0 0 1 2 3 5 QUANTITY (Shirts) 4 6 7 8 O Marginal Revenue Marginal Cost ? Darnell'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 Darnell 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 Darnell receives for each shirt he sells. Therefore, Darnell's profit- maximizing quantity corresponds to the intersection of the curves. Because Darnell is a price taker, this last condition can also be written asarrow_forward
- Suppose Amari operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly competitive market structure for cardigans with a market price equal to $20 per cardigan. The following graph shows Amari's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for cardigans for quantities zero through seven (including zero and seven) that Amari produces. 200 175 TOTAL COST AND REVENUE (Dollars) 8 150 125 100 75 -25 0 U 1 2 5 QUANTITY (Cardigans) ■ 6 Total Cost 7 。 Total Revenue Profitarrow_forwardChapter 16 Homework PRICE (Thousands of dollars per fire engine) 220 Femi 200 180 160 140 120 100 80 60 40 20 0 0 True 1 False 2 4 56 7 QUANTITY (Fire engines) 3 8 Demand 9 10 increase production from 8 to 9 fire engines because the True or False: If alternatively Femi's HookNLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price from $80,000 to $40,000 would result in the same change in the production quantity and, thus, total revenue. Revenue Lost Revenue Gained dominates in this scenario.arrow_forward3. Profit maximization using total cost and total revenue curves Suppose Jayden 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 Jayden's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for rompers for quantities zero through seven (including zero and seven) that Jayden produces. 200 175 150 125 100 TOTAL COST AND REVENUE (Dollars) 75 50 25 25 ח ☐ -25 0 1 2 ☐ ☐ ? Total Revenue Total Cost Profit 5 6 7 8 3 4 QUANTITY (Rompers)arrow_forward
- Calculate Iyana's marginal revenue and marginal cost for the first seven rompers they produce, 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. COSTS AND REVENUE (Dollars per romper) 40 35 30 25 20 15 10 0 0 1 2 3 4 5 6 7 8 QUANTITY (Rompers) Marginal Revenue Marginal Cost ? Iyana's profit is maximized when they produce a total of is $ , an amount rompers. At this quantity, the marginal cost of the final romper they produce 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 than the price received for each romper they sell. Therefore, Iyana's profit-maximizing quantity occurs at the point of intersection between the Because Iyana is a price taker, the previous condition is equivalent to curves.arrow_forwardPlease show working and calculations.arrow_forwardThe blue curve on the fallowing graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Goods 250 225 1guantity 25 "Demanded (inita) 200 Demand Price (Dolars per unitJ 175 125.00 E 150 125 100 75 Damand 50 10 15 20 25 30 35 40 45 s0 QUANTITY (Unta) On the graph input tool, change the number found in the Quantity Demanded feld to determine the prices that correspond to the production of D, 10, 20, 25, 30, 40, and S0 units of output Calculate the total revenue for each of these production leveis. Then, on the fallowing graph, use the green paints (triangie symbol) to plot the resuts. 3130 2017 Total Revenue 2504 2191 SATE 313 15 20 25 30 35 QUANTITY (Nurber of unita) 10 40 45 50…arrow_forward
- Calculate Rian's marginal revenue and marginal cost for the first seven rompers they produce, 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.arrow_forward3. Profit maximization using total cost and total revenue curves Suppose Jayden operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $25 per romper. The following graph shows Jayden's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for rompers for quantities zero through seven (including zero and seven) that Jayden produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 94 0 2 D QUANTITY (Rompers) 6 Total Cost 7 8 O- Total Revenue A Profit ?arrow_forwardSuppose Ginny runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Ginny's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven (inclusive) that Ginny produces. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 50 -25 2 QUANTITY (Shirts) TOTAL COST AND REVENUE (Dollars)arrow_forward
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