COSTS AND REVENUE (Dollars per shirt)302520151050←+01235QUANTITY (Shirts)4678Marginal RevenueMarginal Cost?Hubert's profit is maximized when he producesshirts. When he does this, the marginal cost of the last shirt he produces is $whichisthan the price Hubert receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt thanwould maximize his profit) is $ , which isthan the price Hubert receives for each shirt he sells. Therefore, Hubert's profit-maximizing quantity corresponds to the intersection of thecurves. Because Hubert is a price taker, thislast condition can also be written as Suppose Hubert runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10per shirt.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 the first seven shirts that Hubertproduces, including zero shirts.TOTAL COST AND REVENUE (Dollars)125100755025-25-500012☐■U3 45QUANTITY (Shirts)L6Total Cost78Total RevenueProfit?Calculate Hubert's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the bluepoints (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost.

Marginal cost refers to the additional cost incurred by producing one more unit of a good or…

30 8 COSTS AND REVENUE (Dollars per shirt) 25 15 10 10 0 4 0 1 2 3 4 5 QUANTITY (Shirts) 6 7 8 Marginal Revenue Marginal Cost Hubert'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 Hubert 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 Hubert receives for each shirt he sells. Therefore, Hubert's profit- maximizing quantity corresponds to the intersection of the curves. Because Hubert is a price taker, this last condition can also be written as

30 8 COSTS AND REVENUE (Dollars per shirt) 25 15 10 10 0 4 0 1 2 3 4 5 QUANTITY (Shirts) 6 7 8 Marginal Revenue Marginal Cost Hubert'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 Hubert 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 Hubert receives for each shirt he sells. Therefore, Hubert's profit- maximizing quantity corresponds to the intersection of the curves. Because Hubert is a price taker, this last condition can also be written as

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

See similar textbooks

Similar questions

What two lines on a cost curve diagram intersect at the shutdown point?
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 ? image 1 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.
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.
Suppose Larry runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Larry's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Larry produces, including zero shirts. 125 100 TOTAL COST AND REVENUE (Dollars) 25 ☐ Total Cost ☐ -50 0 1 2 3 4 5 6 7 8 QUANTITY (Shirts) Total Revenue A Profit (?) Calculate Larry'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. 25 2 COSTS AND REVENUE (Dollars per shirt) 0 1 2 3 5 6 7 8 QUANTITY (Shirts) Marginal Revenue Marginal Cost Larry's profit is maximized when he produces is shirts. When he does this, the marginal cost of the previous shirt he…
Aplia Homework: Production and Cost in the Firm 4. Profit maximization using total cost and total revenue curves Suppose Ana runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a price-taker market, and the market price is $10 per teddy bear. The following graph shows Ana's total cost curve. Use the blue points (circle symbol) to plot total revenue, and the green points (triangle symbol) to plot profit for the first seven teddy bears that Ana produces, including zero teddy bears. 125 100 75 P 0 2 QUANTITY (Teddy bears) 6 Total Cost ☐ 8 *** Total Revenue A Profit (?)
The blue curve on the following 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 scored 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. PRICE (Dollars per unit) 100 TOTAL REVENUE (Dollars) 90 80 20 10 0 1250 1125 1000 875 750 625 500 On the previous graph, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 10, 20, 25, 30, 40, or 50 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. 375 250 125 + 0 0 0 Demand 5 10 15 20 25 30 35 40 45 50 QUANTITY (Units) + 5 20 10 15 25 30 35 QUANTITY (Number of units) 40 Graph Input Tool Market for Goods 45 50 Quantity Demanded (Units)…
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 Profit
Calculate 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 as
3. 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 ?
4. A puppet maker calculates that the yearly cost of running his manufactory is $14,000. Additionally it costs him $60 to create each of his puppets. The price per puppet is determined by the following price-demand equation: p=500–2x a. Find the Cost equation for the total number of puppets produced and sold Find the Revenue equation for the total number of puppets produced and sold b. c. How many puppets does he need to make and sell to break even? d. Use the Cost and Revenue equations to find the Profit function What is the price that he needs to charge if he wants to sell exactly 80 puppets? e.
Calculate 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 to
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 $25 per romper. 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 # QUANTITY (Rompers) Total Cost Total Revenue A Profit