Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. 3. Profit maximization using total cost and total revenue curvesSuppose Sean 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 Sean'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 Sean produces.TOTAL COST AND REVENUE (Dollars)2001751501251000-25☐1205QUANTITY (Shirts)4☐Total Cost☐78(?)OTotal RevenueEProfit Calculate Sean'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)540353015105001235QUANTITY (Shirts)678OMarginal Revenue0Marginal Cost(?)Sean's profit is maximized when he producesshirts. When he does this, the marginal cost of the last shirt he produces is Swhich isthan the price Sean 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 Sean receives for each shirt he sells. Therefore, Sean's profit-maximizing quantity corresponds to the intersection of thecurves. Because Sean is a price taker, thislast condition can also be written as

The values are as follows:QuantityTotal…

Sean's profit is maximized when he produces which is shirts. When he does this, the marginal cost of the last shirt he produces is S than the price Sean 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 S which is than the price Sean receives for each shirt he sells. Therefore, Sean's profit- maximizing quantity corresponds to the intersection of the curves. Because Sean is a price taker, this last condition can also be written as

Sean's profit is maximized when he produces which is shirts. When he does this, the marginal cost of the last shirt he produces is S than the price Sean 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 S which is than the price Sean receives for each shirt he sells. Therefore, Sean's profit- maximizing quantity corresponds to the intersection of the curves. Because Sean is a price taker, this last condition can also be written as

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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3. Profit maximization using total cost and total revenue curves Suppose Cho 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 Cho'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 Cho produces.
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