Calculate Becky's marginal revenue and marginal cost for the first seven shirts she 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.4035Marginal Revenue3025Marginal Cost151016.7 8QUANTITY (Shirts)Becky's profit is maximized when she producesshirts. When she does this, the marginal cost of the last shirt she produces is $which isthan the price Becky receives for each shirt she sells. The marginal cost of producing an additional shirt (that is, one more shirtthan would maximize her profit) is $which isthan the price Becky receives for each shirt she sells. Therefore, Becky's profit-maximizing quantity corresponds to the intersection of thecurves. Because Becky is a price taker, thislast condition can also be written asCOSTS AND REVENUE (Dollars per shirt)2. Suppose Becky runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20per shirt.The following graph shows Becky'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 Beckyproduces, including zero shirts.200175Total Revenue150Total Cost125Profit10075-2512.46.7QUANTITY (Shirts)TOTAL COST AND REVENUE (Dollars)25

In Microeconomics, perfect competition refers to the market where all firms sell homogenous…

Answered: Becky's profit is maximized when she…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 1PA

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What two lines on a cost curve diagram intersect at the zero-profit point?
Explain how the profit-maximizing rule of setting P=MC leads a perfectly competitive market to be allocatively efficient.
Will a perfectly competitive market display allocative efficiency? Why or why not?
Suppose Larry 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 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 shirts quantities zero through seven (inclusive) that Larry produces. 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 at each quantity. Larry'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 Larry 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…
Suppose Kevin 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 Kevin'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 Kevin produces. Calculate Kevin's marginal revenue and marginal cost for the first seven teddy bears 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. Kevin's profit is maximized when he produces ___ teddy bears. When he does this, the marginal cost of the last teddy bear he produces is ___ , which is (greater/less) than the price Kevin receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is,…
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5. Kyle operates a transportation company that produces travel services using Cars (C), Drivers (D) and gasoline (G). His production technology is: q=10C ½ D ¼ G ¼. In the short run he has 16 cars for which he pays a total fee of R in rent. He can hire Drivers for wage w and buy gas for price v in competitive markets. He sells his travel services in a price taking market for price P. A. Set up an expression for Kyle’s short run Profits as a function of his input choices. B. Find Kyle’s first order conditions for profit maximization. Express Kyle’s optimum choice of Drivers and Gasoline as functions of (P, v, w). C. Find Kyle’s short run supply curve. Then, given w=v=4 graph the curve.
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $30,000 a year, and take over a restaurant space that he owns and currently rents to his brother for $24,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. Suppose the sushi bar’s revenue from the first year is $120,000. What is the chef’s economics profit? 14,000 -14,000 66,000 68,000
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Suppose Jayden operates a handicraft pop-up retail shop that sells phone cases. Assume a perfectly competitive market structure for phone cases with a market price equal to $20 per phone case. The following graph shows Jayden's total cost curve. Jayden's profit is maximized when they produce a total of ____phone cases. At this quantity, the marginal cost of the final phone case they produce is ___, an amount ( greater or less)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(greater or less)than the price received for each phone case they sell. Calculate the marginal revenue and marginal cost for the first seven phone cases they produce, and plot them on the following graph. Use the blue points to plot marginal revenue and the orange points to plot marginal cost at each quantity.
For the Statement at the end, there are drop down arrows and options for you to choose from, and values to fill in. Drop down options will be listen in brackets, and blanks are values that must be found. Simone's profit is maximized when she produces _______shirts. When she does this, the marginal cost of the last shirt she produces is $_______ , which is (greater/less) than the price Simone receives for each shirt she sells. The marginal cost of producing an additional shirt (that is, one more shirt over the amount that would maximize her profit) is ________, which is (greater/less) than the price Simone receives for each shirt she sells. Therefore, Simone's profit-maximizing quantity corresponds to the intersection of the (marginal cost and marginal revenue/ total cost and profit/ total cost and total revenue/ marginal cost and total revenue/ total revenue and profit/ total cost and marginal revenue) curves. Because Simone is a price taker, this last condition can also be…

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