Suppose Amy gives haircuts on Saturdays to make extra money. She is the only person in town cutting hair on Saturdays and therefore has some market power. Assume that she does not incur fixed costs, and the only significant variable cost to Amy is her time. As she gives more haircuts, Amy must increasingly forgo other valuable Saturday activities. For example, if she gives one haircut, she forgoes reading the paper after breakfast. If she gives two haircuts, she gives up reading the paper and sleeping an extra half-hour.Amy's clients are a varied group willing to pay between $20.00 and $36.00 for a haircut. Assume that Amy cannot price discriminate, i.e., charge different clients different prices. If Amy charges $36.00 per haircut, she will have one client per week; if she charges $32.00, she will have two; if she charges $28.00, three, and so forth. The following table contains data on the revenues and costs of Amy's haircut business as a function of her price–quantity choice. (The costs are based on the value of Amy's alternative activities, in dollar terms. For example, the total cost of the first haircut is $4—the value Amy places on reading the newspaper after breakfast.)Fill in the missing cells of the table and then use them to answer the questions that follow.OutputPriceTotal RevenueMarginal RevenueTotal CostMarginal CostProfit(Haircuts per week)(Dollars per haircut)(Dollars per week)(Dollars per haircut)(Dollars per week)(Dollars per haircut)(Dollars per week)0 0 0 036.004.00136.0036.004.0032.0028.004.00232.0064.008.0056.0020.008.00328.0084.0016.0068.00 424.00 24.00 4.008.00520.00100.0032.0068.00 On the following graph, use the blue points (circle symbol) to plot Amy's total revenue curve, use the orange points (square symbol) to plot her total cost curve, and use the purple points (diamond symbol) to plot her profit curve. Be sure to graph from left to right, starting with zero haircuts and ending with five. Line segments will automatically connect the points. On the following graph, use the blue points (circle symbol) to plot her marginal revenue (MR) curve, and then use the orange points (square symbol) to plot Amy's marginal cost (MC) curve for the first five haircuts. Be sure to plot from left to right and to plot between integers. For example, if Amy's marginal cost of increasing her production from one haircut to two haircuts is x, then you would plot a point at (1.5, x). Line segments will automatically connect the points. Amy maximizes her profit by serving ______per week and charging _______per haircut. If Amy gave more haircuts than her optimal quantity of haircuts, which of the following statements would be true? Check all that apply.- Amy's marginal revenue would be less than her marginal cost.- Amy's profit (total revenue minus total cost) would decline. On the following graph, use the blue points (circle symbol) to plot Amy's total revenue curve, use the orange points (square symbol) to plot her totalcost curve, and use the purple points (diamond symbol) to plot her profit curve. Be sure to graph from left to right, starting with zero haircuts andending with five. Line segments will automatically connect the points.BTOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars per week)Croyd) 1900 ONYO2 NQUANTITY OF OUTPUT (Haircuts par wek)8QUANTITY OF OUTPUT (Hr)oAmy maximizes her profit by servingTobalHaOn the following graph, use the blue points (circle symbol) to plot her marginal revenue (MR) curve, and then use the orange points (square symbol)to plot Amy's marginal cost (MC) curve for the first five haircuts. Be sure to plot from left to right and to plot between integers. For example, Amy'smarginal cost of increasing her production from one haircut to two haircuts is x, then you would plot a point at (1.5, x). Line segments willautomatically connect the points.--0--Tube CProfitMarginal Harve-O-Marginal Col(?)per week and charging(2)per haircut.If Amy gave more haircuts than her optimal quantity of haircuts, which of the following statements would be true? Check all that apply.Amy's marginal revenue would be less than her marginal cost.Amy's profit (total revenue minus total cost) would decline. 2. Marginal analysis and profit maximizationSuppose Amy gives haircuts on Saturdays to make extra money. She is the only person in town cutting hair on Saturdays and therefore has somemarket power. Assume that she does not incur fixed costs, and the only significant variable cost to Amy is her time. As she gives more haircuts, Amymust increasingly forgo other valuable Saturday activities. For example, if she gives one haircut, she forgoes reading the paper after breakfast. If shegives two haircuts, she gives up reading the paper and sleeping an extra half-hour.Amy's clients are a varied group willing to pay between $20.00 and $36.00 for a haircut. Assume that Amy cannot price discriminate, i.e., chargedifferent clients different prices. If Amy charges $36.00 per haircut, she will have one client per week; if she charges $32.00, she will have two; if shecharges $28.00, three, and so forth. The following table contains data on the revenues and costs of Amy's haircut business as a function of her price-quantity choice. (The costs are based on the value of Amy's alternative activities, in dollar terms. For example, the total cost of the first haircut is $4-the value Amy places on reading the newspaper after breakfast.)Fill in the missing cells of the table and then use them to answer the questions that follow.OutputPrice(Haircuts perweek)(Dollars perhaircut)Marginal Revenue(Dollars perhaircut)0123536.0032.0028.0024.0020.00Total Revenue(Dollars perweek)036.0064.0084.00100.0036.0028.0020.004.00Total Cost(Dollars perweek)04.008.0016.0024.0032.00Marginal Cost(Dollars perhaircut)4.004.008.008.00Profit(Dollars perweek)032.0056.0068.0068.00

Question

Suppose Amy gives haircuts on Saturdays to make extra money. She is the only person in town cutting hair on Saturdays and therefore has some market power. Assume that she does not incur fixed costs, and the only significant variable cost to Amy is her time. As she gives more haircuts, Amy must increasingly forgo other valuable Saturday activities. For example, if she gives one haircut, she forgoes reading the paper after breakfast. If she gives two haircuts, she gives up reading the paper and sleeping an extra half-hour.Amy's clients are a varied group willing to pay between $20.00 and $36.00 for a haircut. Assume that Amy cannot price discriminate, i.e., charge different clients different prices. If Amy charges $36.00 per haircut, she will have one client per week; if she charges $32.00, she will have two; if she charges $28.00, three, and so forth. The following table contains data on the revenues and costs of Amy's haircut business as a function of her price–quantity choice. (The costs are based on the value of Amy's alternative activities, in dollar terms. For example, the total cost of the first haircut is $4—the value Amy places on reading the newspaper after breakfast.)Fill in the missing cells of the table and then use them to answer the questions that follow.OutputPriceTotal RevenueMarginal RevenueTotal CostMarginal CostProfit(Haircuts per week)(Dollars per haircut)(Dollars per week)(Dollars per haircut)(Dollars per week)(Dollars per haircut)(Dollars per week)0 0 0 036.004.00136.0036.004.0032.0028.004.00232.0064.008.0056.0020.008.00328.0084.0016.0068.00  424.00 24.00 4.008.00520.00100.0032.0068.00   On the following graph, use the blue points (circle symbol) to plot Amy's total revenue curve, use the orange points (square symbol) to plot her total cost curve, and use the purple points (diamond symbol) to plot her profit curve. Be sure to graph from left to right, starting with zero haircuts and ending with five. Line segments will automatically connect the points. On the following graph, use the blue points (circle symbol) to plot her marginal revenue (MR) curve, and then use the orange points (square symbol) to plot Amy's marginal cost (MC) curve for the first five haircuts. Be sure to plot from left to right and to plot between integers. For example, if Amy's marginal cost of increasing her production from one haircut to two haircuts is x, then you would plot a point at (1.5, x). Line segments will automatically connect the points. Amy maximizes her profit by serving  ______per week and charging _______per haircut. If Amy gave more haircuts than her optimal quantity of haircuts, which of the following statements would be true? Check all that apply.- Amy's marginal revenue would be less than her marginal cost.- Amy's profit (total revenue minus total cost) would decline. On the following graph, use the blue points (circle symbol) to plot Amy's total revenue curve, use the orange points (square symbol) to plot her totalcost curve, and use the purple points (diamond symbol) to plot her profit curve. Be sure to graph from left to right, starting with zero haircuts andending with five. Line segments will automatically connect the points.BTOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars per week)Croyd) 1900 ONYO2 NQUANTITY OF OUTPUT (Haircuts par wek)8QUANTITY OF OUTPUT (Hr)oAmy maximizes her profit by servingTobalHaOn the following graph, use the blue points (circle symbol) to plot her marginal revenue (MR) curve, and then use the orange points (square symbol)to plot Amy's marginal cost (MC) curve for the first five haircuts. Be sure to plot from left to right and to plot between integers. For example, Amy'smarginal cost of increasing her production from one haircut to two haircuts is x, then you would plot a point at (1.5, x). Line segments willautomatically connect the points.--0--Tube CProfitMarginal Harve-O-Marginal Col(?)per week and charging(2)per haircut.If Amy gave more haircuts than her optimal quantity of haircuts, which of the following statements would be true? Check all that apply.Amy's marginal revenue would be less than her marginal cost.Amy's profit (total revenue minus total cost) would decline. 2. Marginal analysis and profit maximizationSuppose Amy gives haircuts on Saturdays to make extra money. She is the only person in town cutting hair on Saturdays and therefore has somemarket power. Assume that she does not incur fixed costs, and the only significant variable cost to Amy is her time. As she gives more haircuts, Amymust increasingly forgo other valuable Saturday activities. For example, if she gives one haircut, she forgoes reading the paper after breakfast. If shegives two haircuts, she gives up reading the paper and sleeping an extra half-hour.Amy's clients are a varied group willing to pay between $20.00 and $36.00 for a haircut. Assume that Amy cannot price discriminate, i.e., chargedifferent clients different prices. If Amy charges $36.00 per haircut, she will have one client per week; if she charges $32.00, she will have two; if shecharges $28.00, three, and so forth. The following table contains data on the revenues and costs of Amy's haircut business as a function of her price-quantity choice. (The costs are based on the value of Amy's alternative activities, in dollar terms. For example, the total cost of the first haircut is $4-the value Amy places on reading the newspaper after breakfast.)Fill in the missing cells of the table and then use them to answer the questions that follow.OutputPrice(Haircuts perweek)(Dollars perhaircut)Marginal Revenue(Dollars perhaircut)0123536.0032.0028.0024.0020.00Total Revenue(Dollars perweek)036.0064.0084.00100.0036.0028.0020.004.00Total Cost(Dollars perweek)04.008.0016.0024.0032.00Marginal Cost(Dollars perhaircut)4.004.008.008.00Profit(Dollars perweek)032.0056.0068.0068.00

Accepted Answer

Profit maximization is a short-run or long-run process of a firm to determine output, input, and…

Output	Price	Total Revenue	Marginal Revenue	Total Cost	Marginal Cost	Profit
(Haircuts per week)	(Dollars per haircut)	(Dollars per week)	(Dollars per haircut)	(Dollars per week)	(Dollars per haircut)	(Dollars per week)
0		0		0		0
36.00	4.00
1	36.00	36.00	4.00	32.00
28.00	4.00
2	32.00	64.00	8.00	56.00
20.00	8.00
3	28.00	84.00	16.00	68.00

4	24.00		24.00
4.00	8.00
5	20.00	100.00	32.00	68.00