Please show working and calculations. Suppose Sam 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 Sam'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 Samproduces, including zero shirts.200175Total Revenue150Total Cost125Profit10050-2534678QUANTITY (Shirts)TOTAL COST AND REVENUE (Dollars) Calculate Sam'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.(?4035Marginal Revenue3025Marginal Cost12345678QUANTITY (Shirts)Sam's profit is maximized when he producesshirts. When he does this, the marginal cost of the last shirt he produces is $, which isv than the price Sam 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 Sam receives for each shirt he sells. Therefore, Sam's profit-maximizingquantity corresponds to the intersection of thecurves. Because Sam is a price taker, this last conditioncan also be written asCOSTS AND REVENUE (Dollars per shirt)

Perfect competition refers to the situation where there are large number of prouder and consumers…

Suppose Sam runs a smalI 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 Sam'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 Sam produces, including zero shirts. 200 175 Total Revenue 150 Total Cost 125 Profit 100 50 25 -25 3 4 5 6 7 8 QUANTITY (Shirts) TOTAL COST AND REVENUE (Dollars)

Suppose Sam runs a smalI 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 Sam'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 Sam produces, including zero shirts. 200 175 Total Revenue 150 Total Cost 125 Profit 100 50 25 -25 3 4 5 6 7 8 QUANTITY (Shirts) TOTAL COST AND REVENUE (Dollars)

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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