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 Megan 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 Megan'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 Megan produces.REVENUE (Dollars)TOTAL COSTA20017515002QUANTITY (Shirts)☐6Total CostOTotal RevenueAProfit(?)Rectangular SnipCalculate Megan's marginal revenue and marginal cost for the first seven shirts she produces, 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 shirt)403500123QUANTITY (Shirts)4678Marginal RevenueOMarginal CostWindow SnipMegan's profit is maximized when she produces5 shirts. When she does this, the marginal cost of the last shirt she produces is $15, whichis lessthan the price Megan receives for each shirt she sells. The marginal cost of producing an additional shirt (that is, one more shirt thanwould maximize her profit) is $25, which is greater than the price Megan receives for each shirt she sells. Therefore, Megan's profit-maximizing quantity corresponds to the intersection of the marginal cost and marginal revenue curves. Because Megan is a price taker, thislast condition can also be written as P = MC

Total Revenue (TR):Meaning: Total Revenue is the total income a firm receives from selling its goods…

Suppose Megan 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 Megan'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 Megan produces. TAND REVENUE (Dollars) 200 175 150 125 100 75 0 -25 0 1 2 3 4 5 QUANTITY (Shirts) 6 Total Cost ☐ 8 O Total Revenue A Profit ?

Suppose Megan 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 Megan'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 Megan produces. TAND REVENUE (Dollars) 200 175 150 125 100 75 0 -25 0 1 2 3 4 5 QUANTITY (Shirts) 6 Total Cost ☐ 8 O Total Revenue A Profit ?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 23RQ: What two lines on a cost curve diagram intersect at the shutdown point?

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