Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper. The following graph shows Madison's total cost curve. (image work) (image work) Madison's profit is maximized when they produce a total of _____ rompers. At this quantity, the marginal cost of the final romper they produce is $___, an amount (greater/less) than the price received for each romper they sell. At this point, the marginal cost of producing one more romper (the first romper beyond the profit-maximizing quantity) is $____, an amount (greater/less) than the price received for each romper they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the ___________ curves. Because Madison is a price taker, the previous condition is equivalent to ____.
Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper. The following graph shows Madison's total cost curve. (image work) (image work) Madison's profit is maximized when they produce a total of _____ rompers. At this quantity, the marginal cost of the final romper they produce is $___, an amount (greater/less) than the price received for each romper they sell. At this point, the marginal cost of producing one more romper (the first romper beyond the profit-maximizing quantity) is $____, an amount (greater/less) than the price received for each romper they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the ___________ curves. Because Madison is a price taker, the previous condition is equivalent to ____.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter7: Proudction Costs
Section: Chapter Questions
Problem 9SQP
Related questions
Question
Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper.
The following graph shows Madison's total cost curve.
(Image down below)
3. Profit maximization using total cost and total revenue curves
Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper.
The following graph shows Madison's total cost curve.
(image work)
(image work)
Madison's profit is maximized when they produce a total of _____ rompers. At this quantity, the marginal cost of the final romper they produce is $___, an amount (greater/less) than the price received for each romper they sell. At this point, the marginal cost of producing one more romper (the first romper beyond the profit-maximizing quantity) is $____, an amount (greater/less) than the price received for each romper they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the ___________ curves. Because Madison is a price taker, the previous condition is equivalent to ____.
Transcribed Image Text:Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for rompers for quantities zero through
seven (including zero and seven) that Madison produces.
TOTAL COST AND REVENUE (Dollars)
200
175
150
125
100
5
50
25
-25
0
0
1
☐
2
0
3
4 5
QUANTITY (Rompers)
6
Total Cost
7
8
Total Revenue
Profit
(?)
Transcribed Image Text:Calculate Madison'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.
(?
COSTS AND REVENUE (Dollars per romper)
40
35
0
0
1
2
4
3
5
QUANTITY (Rompers)
6
7
8
Marginal Revenue
Marginal Cost
Expert Solution
Step 1
A perfectly competitive firm is a price taker and can sell any quantity of the commodity at the market determined price.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning