Calculate Amari's marginal revenue and marginal cost for the first seven cardigans they produce, and plot them on the following graph. Usethe blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity.98COSTS AND REVENUE (Dollars per cardigan)35201510125QUANTITY (Cardigans)67Marginal RevenueMarginal Cost, an amountAmari's profit is maximized when they produce a total ofcardigans. At this quantity, the marginal cost of the final cardigan theyproduce is $than the price received for each cardigan they sell. At this point, the marginal cost ofproducing one more cardigan (the first cardigan beyond the profit maximizing quantity) is $, an amountthan the pricereceived for each cardigan they sell. Therefore, Amari's profit-maximizing quantity occurs at the point of intersection betweenthecurves. Because Amari is a price taker, the previous condition is equivalent to 3. Profit maximization using total cost and total revenue curvesSuppose Amari operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly competitive market structure for cardiganswith 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 zerothrough seven (including zero and seven) that Amari produces.2001758TOTAL COST AND REVENUE (Dollars)838121001000OQUANTITY (Cardigans)DTotal Cost76Total RevenueProfit?

Total cost is the total cost of production, which includes both fixed and variable costs. The cost…

Answered: 3. Profit maximization using total cost…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 4PA

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Calculate Amari's marginal revenue and marginal cost for the first seven cardigans 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.
9
8
COSTS AND REVENUE (Dollars per cardigan)
35
20
15
10
1
2
5
QUANTITY (Cardigans)
6
7
Marginal Revenue
Marginal Cost
, an amount
Amari's profit is maximized when they produce a total of
cardigans. At this quantity, the marginal cost of the final cardigan they
produce is $
than the price received for each cardigan they sell. At this point, the marginal cost of
producing one more cardigan (the first cardigan beyond the profit maximizing quantity) is $
, an amount
than the price
received for each cardigan they sell. Therefore, Amari's profit-maximizing quantity occurs at the point of intersection between
the
curves. Because Amari is a price taker, the previous condition is equivalent to

3. Profit maximization using total cost and total revenue curves
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
8
TOTAL COST AND REVENUE (Dollars)
8
3
8
12
10
0
1
0
0
0
O
QUANTITY (Cardigans)
D
Total Cost
7
6
Total Revenue
Profit
?

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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.

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