Suppose Amari operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly competitive market structure for cardigans with amarket 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 throughseven (including zero and seven) that Amari produces.200175TOTAL COST AND REVENUE (Dollars)815012510075-250U125QUANTITY (Cardigans)■6Total Cost7。Total RevenueProfit Calculate Amari's marginal revenue and marginal cost for the first seven cardigans they produce, 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 at each quantity.COSTS AND REVENUE (Dollars per cardigan)83525201595001235QUANTITY (Cardigans)467Marginal RevenueMarginal CostAmari's profit is maximized when they produce a total ofcardigans. At this quantity, the marginal cost of the final cardigan they produce is, an amountthan the price received for each cardigan they sell. At this point, the marginal cost of producing one morecardigan (the first cardigan beyond the profit maximizing quantity) is 5, an amountthan the price received for each cardiganthey sell. Therefore, Amari's profit-maximizing quantity occurs at the point of intersection between thecurves. Because Amari is a price taker, the previous condition is equivalent to

Total revenue refers to the product of price and quantity . Profits are maximized at the point where…

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. ND REVENUE (Dollars) 200 175 150 125 100 75 Total Cost 。 Total Revenue Profit

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. ND REVENUE (Dollars) 200 175 150 125 100 75 Total Cost 。 Total Revenue Profit

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter10: The Firm And The Industry Under Perfect Competition

Section: Chapter Questions

Problem 2DQ

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