Suppose Felix runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the marketprice 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 throughseven (inclusive) that Felix produces.TOTAL COST AND REVENUE (Dollars)2001751501251007550250-2501●^2O☐A☐A345QUANTITY (Frying pans)O☐6Total Cost☐78oTotal RevenueProfit?image 1Calculate Felix's marginal revenue and marginal cost for the first seven frying pans 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 at each quantity. 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 bluepoints (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity.COSTS AND REVENUE (Dollars per frying pan)403530252015105001235QUANTITY (Frying pans)4678Marginal RevenueMarginal Cost(?)image 2Felix's profit is maximized when he produceswhich isfrying pans. When he does this, the marginal cost of the last frying pan he produces isthan the price Felix receives for each frying pan he sells. The marginal cost of producing an additional frying pan (that is, onemore frying pan than would maximize his profit) is $ , which isthan the price Felix receives for each frying pan he sells.Therefore, Felix's profit-maximizing quantity corresponds to the intersection of thecurves. Because Felixis a price taker, this last condition can also be written as

Total Revenue (TR):Meaning: Total Revenue is the total income a firm receives from selling its goods…

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.

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.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter23: Profit Maximization

Section: Chapter Questions

Problem 1E

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